Friday, June 8, 2007

Policies to reduce poverty

Hello apart from taxes and benefits what other measures can be used to tackle poverty.

1. Minimum wage.

Min wages increase incomes for the low paid. This helps to reduce relative poverty.
Min wages may also increase incentive to get a job.
However, min wages may cause unemployment (in competitive labour markets)
Min wages benefit most second income earners and students. Often the poorest aren't working at all.

Does a minimum wage reduce poverty?

2. Economic Growth.

increasing economic growth increases Real GDP. The "trickledown effect" says that everyone will ultimately benefit from economic growth.
However, there is no guarantee that economic growth will reduce relative poverty. Often those who benefit the most from economic growth are those with high skills and assets. The underclass of low skilled and poor education often do not benefit.

3. Better Education and training.

The cause of much unemployment and low wage jobs is lack of qualifications and training.
However, there is no guarantee spending on education and training will lead to better skills in the workforce, some people may be reluctant to attend training schemes.
Also the benefits are very long term and hard to quantify.

Poverty, income inequality and economic growth

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