poverty trap


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poverty trap

the situation where a slight increase in earnings leads to an individual or

family being worse off overall as a consequence of losing entitlement to other benefits. People on low incomes may be eligible not only for social security support but may also make lower income tax and National Insurance (NI) contributions. A slight increase in their earnings may lead to the loss of their social security entitlement and put them in a position where they have to pay higher income tax and NI contributions; the slight increase in earnings may be considerably less than the extra amount they have to pay in NI and income tax contributions and their loss of social security support. The existence of a poverty trap is seen to be inevitable where there is a system of means-tested social security benefits. A similar situation exists where single mothers may be considered to be in a poverty trap in so far as a woman in a reasonably well-paid job may have that income jeopardized by the need to pay for childcare. By taking a part-time job or giving up paid work altogether she may be able to look after her child or children, but is likely to lose any occupational benefits, including a pension, as well as her career prospects.

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Health shocks, agriculture shocks due to excess or lack of rain or any other crises push the poor back into poverty trap and they are unable to tackle these risks well in time.
In a model with random growth, escape from the poverty trap might be possible with some small probability.
A sub-thread of the growing poverty trap literature emphasizes the relationship between risk avoidance and poverty (Bardhan et al.
out of the poverty trap that afflicts more than a billion people worldwide.
Others think that all of Northern Ontario is sliding into a poverty trap as a result of federal and provincial policies.
A huge push with key investments in people and infrastructure will provide the tools necessary to break out of the poverty trap and start on the path of sustainable development.
Breaking out of that poverty trap requires a nation's institutions to adopt longer-term perspectives.
Being employed is more helpful in escaping the poverty trap in some countries than others: in the UK, Denmark, Belgium, Ireland and Germany, it reduces the risk by two thirds; in the Netherlands and Luxembourg, only "slightly".
If not, the report notes, "millions of people will never escape the poverty trap, as with each new [disaster], precious gains being made in poverty eradication are being swept away.
This policy implies non-means-tested child allowances/tax credits, thus removing the stigma of welfare from child payments and eliminating the poverty trap wherein people lose in benefits what they gain in wages when they get work.
In a desperate attempt to escape the poverty trap in Colombia and avoid marrying a man she doesn't love, Maria has agreed to ingest the pellets and smuggle them into New York, where she hopes to find a new life.
Tabata, Ken (2003) "Inverted U-shaped fertility dynamics, the poverty trap and growth" Economics Letters 81:95-102 [disponible en www.

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