Module 4 - POVERTY, INEQUALITIES AND economic growth has been a major factor in

DEVELOPMENT reducing the levels of poverty which were seen

Poverty is a state or condition in which a person or
community lacks the financial resources and essentials
for a minimum standard of living.
Poverty means that the income level
employment is so low that basic human needs can't be
met
● Scale and Magnitude of Poverty
Absolute' poverty is “insufficiency in
basic necessities of existence”. In practical
terms, this usually means “being without
adequate food, clothing or shelter”. The notion
of 'poverty line' describes poverty in
subsistence terms, i.e., the
necessary for the maintenance of physical
health.
● Measuring Poverty and Inequality
Poverty is measured in the
States by comparing a person's or family's
income to a set poverty threshold or minimum
amount of income needed to cover basic
needs. People whose income falls under their
threshold are considered poor.
Poverty can be and is measured in
different ways by governments, international
organisations, policy makers and practitioners.
Increasingly, poverty is understood
multidimensional, comprising social, natural
and economic factors situated within wider
socio-political processes. The capabilities
approach also argues that capturing the
perceptions of poor people is fundamental in
understanding and measuring poverty
To reduce poverty, government policies could include:
1. Sustained economic growth
The argument is that promoting
economic growth increases total income in
society, creating more jobs and income which
could be redistributed. In the past 100 years,
in pre-war Britain and the US. However, it is
not necessarily the case that income and
wealth will trickle down to the poorest. There is
a concern that economic growth could widen
from relative poverty because it benefits the highly
skilled and wealthy classes more than those at
the bottom,
2. Reduce Unemployment
Unemployment is a major cause of
poverty because the unemployed have little
income, relying on state benefits.
Unemployment can be reduced through both
supply-side policies, such as free training
'minimal' schemes for those who are structurally
unemployed.
Poverty and unemployment are often
geographical problems, with depressed areas
United seeing higher levels of poverty. Policies to
overcome geographical poverty could include
government subsidies for firms to set up in
depressed areas. Also building better
infrastructure (transport and communication) in
depressed areas can provide an economic
stimulus to create new jobs.
3. Progressive Taxes
Increasing progressive taxes, such as the
higher rate of income tax from 40% to 50%, will take
as more income from those on high-income levels. This
enables cuts in regressive taxes (e.g. VAT/Sales tax)
and increased welfare benefits which help increase the
income of the poor. This can be an effective way to
reduce relative poverty.
● However, critics argue higher income taxes
create a disincentive to work., leading to less
output. This is because higher tax makes work
less attractive and reduces the opportunity
cost of leisure. Therefore people work less and
enjoy more leisure. This is known as the
substitution effect. Similarly higher corporation
tax may discourage investment in the UK
 ● However, this is disputed by other economists,
who point out that higher tax reduces incomes
and this may encourage people to work more,
to maintain their income. (This is known as the
income effect)
● Evidence suggests that higher income tax has
little incentive on the supply of labour,
suggesting labour supply is relatively inelastic.
However, it also depends at what level income
tax is set. There is certainly a level where
higher income tax will reduce incentives to
work.
● Other problems with increasing income tax,
include tax evasion and the fact firms may
adjust wages to compensate for the higher
taxes.
4. Increasing benefits to the poor
Means-tested benefits involve
increasing welfare benefits to those on low
incomes. For example, universal tax credit,
food stamps or child benefit.
Advantages of means-tested benefits:
1. They allow money to be targeted to
those who need it most. e.g family tax
credit or pension credit.
2. It is cheaper than universal benefits
and reduces the burden on the
taxpayer.
However, the problem with using benefits to
reduce poverty include:
● Means-tested benefits are often
unpopular because people are
stigmatised as being poor.
● Also, it may create a disincentive to
earn a higher wage because if you do
get a higher paid job you will lose at
least some of your benefits and pay
more tax. This is known as “the
benefits trap” or the “poverty trap”.
The poverty trap occurs where people
on low incomes are discouraged from
working extra hours or getting a higher
paid job because any extra income
they earn will be taken away in lost
benefits and higher taxes. To avoid
the poverty trap the government can
grade benefits so that there isn’t an
immediate cut off point.
● Some relatively poor may fall just
outside the qualifying limit.
● Also, not everyone entitled to means-
tested benefit will collect them
because of ignorance or difficulties in
applying.
The government used to prefer universal
benefits because it avoided the above problem, and
people feel if they contribute towards taxes they
deserve their benefits regardless of their wealth.
However, in recent years, the welfare state
has faced increased demands due to demographic
factors leading to more calls for means-tested benefits.
5. National Minimum Wage
The government could increase the national
minimum wage. This is an effective way of increasing
the incomes of the low paid and therefore reducing
wage inequality. A related concept is the Voluntary
Living Wage – an attempt to encourage firms to pay
higher wages.
● In recent years, minimum wages have become
more important in tackling in-paid work in both
the UK and US.
●
● In the UK, the number of workers benefitting
from the minimum wage has increased from
830,000 in 1999 to 2 million in 2018.
● In the US, there is a proposal to increase the
federal minimum wage to $15 by 2024 – a
move that could see 33.5 million U.S. workers
and 6.2 million workers in poverty see a rise in
the minimum wage.
● A potential problem of increasing the minimum
wage is that it may cause unemployment
 because firms may not be able to afford the
workers. If it does cause unemployment,
poverty could worsen. However, if firms have
monopsony power, then they will be able to
afford higher wages. Empirical evidence
suggests that we can increase minimum
wages fairly significantly before the cost of
falling employment and higher prices outweigh
the benefit of rising wages and higher
productivity. See more on raising the minimum
wage
6. Benefits in kind.
These are important public services which are
provided free at the point of use (or subsidised). They
mainly involve education and health care. Free
education enables those from low-income families to
gain skills and qualifications which can help lead to
better jobs and higher incomes in the future.
7. Universal basic income (UBI)
A universal basic income or citizen’s income
involves giving every citizen a weekly benefit –
regardless of circumstances and income. The idea is
to ensure everyone has a minimum income guarantee,
but without any disincentives of losing means-tested
benefits from working more. See more at Universal
basic income (UBI)
Policies to reduce poverty in developing economies
To reduce poverty in developing economies,
the focus may be on different policies.
● Education – greater spending on education
and training can enable a higher-skilled
workforce.
● Foreign Aid – aid from developed countries
can be used to invest in better health care and
education. However, some argue aid can
encourage dependency.
● Diversification of the economy away from
agriculture to manufacturing. This enables
greater economic development but may be
difficult to do without the right skills and
infrastructure.
Absolute vs. Relative Poverty
When measured, poverty may
be absolute or relative. Absolute poverty refers to a set
standard which is consistent over time and between
countries. An example of an absolute measurement
would be the percentage of the population eating less
food than is required to sustain the human body
(approximately 2000–2500 calories per day).
Relative poverty, in contrast, views poverty as
socially defined and dependent on social context. One
relative measurement would be to compare the total
wealth of the poorest one-third of the population with
the total wealth of the richest 1% of the population. In
this case, the number of people counted as poor could
increase while their income rises. There are several
different income inequality metrics; one example is
the Gini coefficient.
Although absolute poverty is more common in
developing countries, poverty and inequality exist
across the world.
Both absolute and relative poverty measures
are usually based on a person's yearly income and
frequently take no account of total wealth. Some
people argue that this ignores a key component of
economic well-being. Major developments and
research in this area suggest that standard one
dimensional measures of poverty, based mainly on
wealth or calorie consumption, are seriously deficient.
This is because poverty often involves being deprived
on several fronts, which do not necessarily correlate
well with wealth. Access to basic needs is an example
of a measurement that does not include wealth.
Accesses to basic needs that may be used in the
measurement of poverty are clean water, food, shelter,
and clothing. It has been established that people may
have enough income to satisfy basic needs, but not
use it wisely. Similarly, extremely poor people may not
be deprived if sufficiently strong social networks, or
social service systems exist.
 MODULE 5- HUMAN POPULATION AND
ECONOMIC DEVELOPMENT

Population is defined as all the inhabitants of

Globalisation and Poverty
In simple terms, globalization is the process
by which people and goods move easily across
borders. Principally, it's an economic concept – the
integration of markets, trade and investments with few
barriers to slow the flow of products and services
between nations.
a particular town, area, or country. While population
growth rate is the average annual rate of change of
population size during a specified period. What is
the significance of population in the achievement of
economic growth? Is the human population really
detrimental to economic growth? Below we will look at
four theories about population that inform sociological
thought: Malthusian, zero population growth,
cornucopian and demographic transition theories.
Theories on Population

1. Malthusian Theory of Population

Economic growth is the main channel through
which globalization can affect poverty. What 2. Zero Population Growth

researchers have found is that, in general, when 3. Cornucopian Theory

countries open up to trade, they tend to grow faster 4. Demographic Transition
and living standards tend to increase. The usual Malthusian Theory
argument goes that the benefits of this higher growth
Thomas Malthus was an 18th-century British
trickle down to the poor.
philosopher and economist noted for
the Malthusian growth model, an exponential
We investigated four factors typically cited as
formula used to project population growth.
causing changes in household in- come inequality:
The theory states that food production will not be able
namely, (1) the rising proportion of urban households,
to keep up with growth in the human population,
(2) age distribution changes, (3) increasing number of
resulting in disease, famine, war, and calamity.
highly educated households, and (4) wage
rate inequality. (1) Rising proportion of urban
households.

U.S. Inequality that Everyone Should Know

● Wage Inequality

● Homelessness

● Occupational Sex Segregation

Zero Population Growth Theory

● Racial Gaps in Education This theory refers to a population that is unchanging –

it is neither growing, nor declining; the growth rate
● Racial Discrimination
is zero. This demographic balance could occur when
● Child Poverty the birth rate and death rate are equal. Zero
population growth, sometimes
● Residential Segregation
abbreviated ZPG (also called the replacement level of
● Health Insurance and many more. fertility), is a condition of demographic balance where
the number of people in a specified population and their philosophic opponents—Malthus and his
neither grows nor declines, considered as a social aim school—are called "doomsters" or "doomers.”
by some. According to some, zero population growth, Demographic Transition Theory of Economic
perhaps after stabilizing at some optimum population, Growth
is the ideal towards which countries and the whole
In demography, demographic transition is a
world should aspire in the interests of accomplishing
phenomenon and theory which refers to the historical
long-term environmental sustainability. What it means
shift from high birth rates and high infant death rates in
by the number of people neither grows nor declines' is
societies with minimal technology, education
that births plus in-migrants equal deaths plus out-
(especially of women) and economic development, to
migrants.
low birth rates and low death rates in societies with
Cornucopian theory of population growth advanced technology, education and economic
Cornucopian hold an anthropocentric view of the development, as well as the stages between these two
environment and reject the ideas that population- scenarios. Although this shift has occurred in
growth projections are problematic and that Earth has many industrialized countries, the theory and model
finite resources and carrying capacity (the number of are frequently imprecise when applied to individual
individuals an environment can support without countries due to specific social, political and economic
detrimental impacts). factors affecting particular populations.

"When civilization [population] increases, the available However, the existence of some kind of demographic
labor again increases. In turn, luxury again increases transition is widely accepted in the social sciences
in correspondence with the increasing profit, and the because of the well-established
customs and needs of luxury increase. Crafts are historical correlation linking dropping fertility to social
created to obtain luxury products. The value realized and economic development. Scholars debate
from them increases, and, as a result, profits are again whether industrialization and higher incomes lead
multiplied in them. Production there is thriving even to lower population, or whether lower populations lead
more than before. And so it goes with the second and to industrialization and higher incomes. Scholars also
third increase. All the additional labor serves luxury debate to what extent various proposed and
and wealth, in contrast to the original labor that served sometimes inter-related factors such as higher per
the necessity of life." capita income, lower mortality, old-age security, and

A cornucopian is a futurist who believes that rise of demand for human capital are involved.

continued progress and provision of material items for

mankind can be met by similarly continued advances
in technology. Fundamentally they believe that there is
enough matter and energy on the Earth to provide for
the population of the world.

Looking further into the future, they posit that the

abundance of matter and energy in space would
First Stage:
appear to give humanity almost unlimited room for
growth.The term comes from the cornucopia, the "horn In this stage, the country is backward and is

of plenty" of Greek mythology, which magically characterized by high birth and death rates with the

supplied its owners with endless food and drink. result that the growth rate of the population is low.

Cornucopians are sometimes known as "boomsters", People mostly live in rural areas and their main
occupation is agriculture which is in a state of
backwardness. There are a few simple, light and small
consumer goods industries. The tertiary sector
consisting of transport, commerce, banking and
insurance is underdeveloped. All these factors are
responsible for low incomes and poverty of the
masses. Large family is regarded as a necessity to
augment the low family income. Children are an asset
to society and parents. There being mass illiteracy, the
society is not expected to educate them and thus
burden itself. The existence of the joint family system
provides employment to all children in keeping with
their ages. Thus a child becomes an earning member
even at the age 5 when he becomes a helping hand to
his parents in domestic affairs. More children in a
family are also regarded as an insurance against old
age by the parents. People being illiterate, ignorant,
and superstitious and fatalist are averse to any
methods of birth control. Children are regarded as
God-given and preordained. Being childless is
regarded as a curse and the parents are looked down
upon by society. All these economic and social factors
are responsible for a high birth rate in the country.
Along with high birth rate, the death rate is also high
due to non-nutritional food with a low caloric value, and
lack of medical facilities and of any sense of
cleanliness. People live in dirty and unhealthy
surroundings in ill-ventilated small houses. As a result,
they are disease-ridden and the absence of proper
medical care results in large deaths.
The mortality rate is the highest among the children
and the next among women of childbearing age. Thus
unhygienic conditions, poor diet and the lack of
medical facilities are the reasons for a high mortality
rate in this stage. This stage continued in Western
Europe approximately up to 1840.
Second Stage:
In the second stage, the economy enters the phase of
economic growth. Agricultural and industrial
productivity increases and the means of transport
develop. There is greater mobility of labor. Education
expands. Incomes increase. People get more and
better quality food products. Medical and health
facilities are expanded. Modern drugs are used by the
people. All these factors bring down the death rate. But
the birth rate is almost stable. People do not have any
inclination to reduce the birth of children because with
economic growth employment opportunities increase
and children are able to add more to the family
income. With improvements in the standard of living
and the dietary habits of the people, the life
expectancy also increases. People do not make any
efforts to control the size of family because of the
presence of religious dogmas and social taboos
towards family planning. Of all the factors in economic
growth, it is difficult to break with the past social
institutions, customs and beliefs. As a result of these
factors, the birth rate remains at the previous high
level.
Third Stage:
In this stage, the fertility rate declines and tends to
equal the death rate so that the growth rate of
population declines. As growth gains momentum and
people cross the subsistence level of income, their
standard of living rises. The leading growth sectors
expand and lead to an expansion in output in other
sectors through technical transformations. Education
expands and permeates the entire society. Popular
education leads to popular enlightenment and opens
the way to knowledge. It creates self-discipline, power
to think rationally and to probe into the future. People
discard old customs, dogmas and beliefs and develop
individualistic spirit and break with the joint family. Men
and women prefer to marry late. The desire to have
more children to supplement parental income declines.
People readily adopt family planning devices. They
prefer to go in for a baby car rather than a baby.
Moreover, increased specialization following rising
income levels and the consequent social and
economic mobility make it costly and inconvenient to
rear a large number of children. All this tends to reduce
the birth rate which along with an already low death
rate brings a decline in the growth rate of population.
The advanced countries of the world are passing
through this last stage and the population is increasing
at a slow pace in them.
Conclusion: the most important factors of development, along with

The theory of demographic transition is the most the following:

acceptable theory of population growth. It neither lays

emphasis on food supply like the Malthusian theory,
nor does it develop a pessimistic outlook towards
population growth. It is also superior to the optimum
theory which lays an exclusive emphasis on the
increase in per capita income for the growth of In Economics, the term human capital is used
population and neglects the other factors which to define increase in productivity levels
influence it. The demographic transition theory is and human capacities due to education and health.
superior to all the theories of population because it is According to this approach, it is believed that
based on the actual population growth trends of the investment in education and health brings about an
developed countries of Europe. Almost all the indirect increase in the well-being of
European countries of the world have passed through the humans through increase in incomes.
the first two stages of this theory and are now in the Human capital theory emphasizes
final stage. Not only this, this theory is equally how education increases the productivity and
applicable to the developing countries of the world. efficiency of workers by increasing the level of
Very backward countries in some of the African states cognitive stock. of economically
are still in the first stage whereas all the other productive human capability, which is a product of
developing countries of the world are in the transitional innate. Abilities and investment in human beings.
stage two it is on the basis of this theory that
But there are problems on education that may affect
economists have developed economic-demographic
the quality of human capital.
models so that underdeveloped countries should enter
10 Major Challenges Facing Public Schools
the final stage and attain the stage of self-sustained
growth. Thus this theory has universal applicability.  Classroom Size.

 Poverty.

MODULE 6 – HUMAN CAPITAL: EDUCATION AND  Family Factors.

HEALTH  Technology.

 Bullying.

Lecture/Discussion  Student Attitudes and Behaviors.

Human capital is defined in the Oxford English  No Child Left Behind.

Dictionary as “the skills the labor force possesses and  Parent Involvement
is regarded as a resource or asset.” It encompasses Problems on Class Size
the notion that there are investments in people
Overcrowded room creates a deteriorating effect on
(e.g., education, training, health) and that these
education. Space for teacher’s supervision on
investments increase an individual's productivity.
students is hampered by increasing class size.
Human capital can include qualities like education,
Discipline becomes more difficult due to higher number
Technical or on-the-job training, health, mental and
of students inside the classroom while there is only
emotional well-being, professionalism. problem-
one teacher to attend to them. Burnout teachers seem
solving, people management and communication
to experience stress more due to this problem,
skills. It is known to many that human capital is one of
Problems on Poverty understanding a short simple statement about their

Poverty and education are inextricably linked, because everyday life.

people living in poverty may stop going to school so It is indeed a great for Filipino families to send their
they can work, which leaves them without literacy and children in school. They believe that education would
numeracy skills they need to further their careers. give their children knowledge and skills which could be

Access to high-quality primary education and give them greater job opportunites and thus a better

supporting child well-being is a globally- way of earning for themselves and for their families.

recognized solution to the cycle This knowledge, skills and attitude developed by an

of poverty.. Education is often referred to as the great educational system is what composes a human

equalizer: It can open the door to jobs, resources, and capital.

skills that a family needs to not just survive, but thrive. Philippines is one country with high literacy rate

Problems on Technology because of how Filipino values education.

Unfortunately, record shows that the allocated funds
Technology has also begun to change the roles of
for education is lowest compared to other Asian
teachers and learners. Technology is a powerful tool
countries such as Indonesia and Malaysia. The
that can support and transform education in many
question now is, does lower budget allocation leads to
ways, from making it easier for teachers to create
slower economic development?
instructional materials to enabling new ways for people
to learn and work together.

But there are constraints in using technology in

education. “We need to be careful to introduce
technology in thoughtful ways or else we will be left
with another generation of teachers who see
technology as nothing but overpriced distractions
rather than useful teaching tools.”

There are others problems on education that may

affect the achievement of highest potentials among the
The education sector is one of the priorities of the
human capital these are the bullying, family factors,
present administration. President Rodrigo Duterte
students attitudes and behavior and diminishing parent
signed into law the Free Education for all. In year
involvement.
2020, the budget given to the Education Sector was
Literacy rate
P654.6. The highest among the other departments of
The economic indicator to measure the ability
the government.
of the human capital to read and write, and do some
arithmetic is called literacy rate. It indicates how many
members of the given society is educated. Literacy
rate tells how effective and efficient the educational
system in a given country is.

What is the literacy rate in the Philippines 2020?

98.18%

Adult literacy rate is the percentage of people ages 15

and above whom can both read and write with
Deterioration of Human Capital Here is the list of Healthiest Population of the

The most common ways human capital World:

can depreciate are through unemployment, injury,

mental decline, or the inability to keep up with
innovation. Consider an employee who has a
specialized skill. If he goes through a long period of
unemployment, he may be unable to keep these levels
of specialization. The longer a
worker's unemployment duration, the larger the
chance that her human capital has depreciated.
Workers whose skills erode while being unemployed
are less productive upon re-employment than workers
whose skills do not erode.

To perform to the fullest the person should be in a

good health and thus gain potential to do the work.
Effective work is only done by a healthy person. Japan Healthcare Spending 2000-2021.
A healthy person can contribute to the growth and Japan Healthcare Spending - Historical Data
development of the economy by doing productive
Year Per Capita (US $)
work. Health itself is not only a part of human
capital but also contributes to human capital such as 2016 $4,174
education. Improved health (measured using life
2015 $3,733
expectancy) allows the working population to be more
productive in terms of new ideas and innovations. 2014 $4,099

Life expectancy is the key metric for assessing

population health. Broader than the narrow metric of The table above shows Japan Healthcare spending
the infant and child mortality, which focus solely at from 2014-2016. The table shows a consistent figure
mortality at a young age, life expectancy captures the of $4000 dollars per annum in the 3-year period. This
mortality along the entire life course. It tells us the implicates that the country is really investing on its
average age of death in a population. human capital.
The optimum population of Earth – enough to
guarantee the minimal physical ingredients of a decent
life to everyone – was 1.5 to 2 billion people rather
than the 7 billion who are alive today or the 9 billion
expected in 2050, said Ehrlich in an interview with the
Guardian. "How many you support depends on
lifestyles. A healthy world population means the
human capital have access to decent lifestyles.