17) poverty and inequality - macro objectives Flashcards
How does economic growth benefit poverty?
Should reduce poverty- higher AD, higher lifting pay of low paid, creating more job opportunities, leading to higher RDI.
How does economic growth not benefit poverty?
However, may increase relative poverty as growth might disproportionally benefit higher earners
Depends on type of poverty, depends on Government actions etc
how does economic growth benefit inequality?
May reduce inequality if higher AD leads to more jobs, higher income for lower paid.
how does economic growth not benefit inequality?
May increase it- depending on who benefits from growth- workers or shareholders?
Depends on taxation policies-progressive or regressive;
May depend on economic position-e.g. if at Ye growth means inflation-inflation may lead to more inequality
how does economic development benefit poverty?
Should reduce poverty… higher GNI per capita (hopefully means higher RDI for poorer households); better education/health care allowing households to work more, better jobs, better pay etc
how does economic development not benefit poverty?
May not reduce levels of poverty; depends on inequality-e.g GNI per capita may increase causing HDI to improve but all goes to the elite
Depends on government- how they use increased tax revenue
Depends on what’s driving development (e.g. FDI, Foreign Aid, Microfinance initiative)
Depends if it sustainable
how does economic development benefit inequality?
May reduce inequalities- lifting households out of extreme poverty meaning a narrower gap between some of poorest and everybody else
More opportunities (health/education) may enable wider spread of households to get & keep good jobs
how does economic development not benefit inequality?
May not improve inequalities- same reason as for poverty re GNI per capita.
May not improve inequalities due to possible government failure
Depends on taxation policies
Depends on what’s driving the development- same as poverty
Depends if its sustainable
how does high inflation not benefit poverty?
Likely to make poverty worse.
Lower RDI so some households not in poverty might slip into it. Lots of relevant examples now about fuel poverty, food banks etc
May depend on how long inflation lasts; also depends on government-if benefits increase in line with inflation then the extreme poor might not suffer.
Also, inflation is bad for savers so many at the high end may be worse off, reducing relative poverty
how does high inflation not benefit inequalities?
Likely to increase inequalities.
I) income inequalities- higher paid workers generally are in stronger position to inflation-proof their wages
ii) Wealth inequalities- property and asset owning classes are better might see the value of their assets rise. Those with few assets become further adrift as rents etc become much higher.
However, it depends on the government. If benefits (as they often are) rise in line with inflation then poorer households may do better from it than those in jobs whose RDI falls
how does employment benefit poverty?
Higher employment reduce poverty
how does employment not benefit poverty?
could be that jobs are mainly low skill/low pay which means relative poverty may increase
how does employment benefit inequality?
May reduce inequalities if new are jobs well paid and the taxes progressive.
how does employment not benefit inequality?
May make it worse; depends on type of jobs; economic position etc
