Other Policies
- The poverty cycle diagram (below) was introduced in the previous subtopic and helps to explain the causes of poverty
- Any policy that helps to break the poverty cycle at any point will help to improve the standards of living within a country
- Policies used to alleviate poverty include promoting economic growth, improving education, providing more generous state benefits, progressive taxation, and the establishment/increase of a national minimum wage
Policies which help to improve any factor in the diagram will help to alleviate poverty
How Different Policies Alleviate Poverty
Policy |
Explanation |
Impact on Poverty Cycle |
Investing in human capital e.g. education |
|
Higher education/skill levels → higher human capital → increased productivity → higher output → higher income |
More generous transfer payments |
|
More benefits → higher wages → better education/healthcare → better human capital → better productivity → higher wages |
Establishment/increase of national minimum wage |
|
Higher wages → better education/healthcare → better human capital → better productivity → higher wages |
Establishing a universal basic income |
|
Minimum income for all → better education/healthcare → better human capital → improved labour offer → decreasing unemployment |
Targeted government spending on goods/services |
|
Higher education/skill levels → higher human capital → increased productivity → higher output → higher income |
Policies to reduce discrimination |
|
Less discrimination → better productivity → higher wages |