ATTENDANCE

QUESTION
What is the first thing you will do
if tomorrow you win PHP 100 mil
in lottery?
DEVELOPMENT ECONOMICS

Lecture #5: Poverty and Inequality

Prof. Cherrie Nuez

2
WARNING: DISCLAIMER
This presentation is for educational purposes only, and
constitute as summary guide of the Professor for
discussions during class. You are not allowed to copy,
distribute and share this to any students outside of class
without prior permission from me. Violation of this will
result in automatic grade of 5.0.

Prof. Cherrie Nuez

4
The BIG Questions

Who are the poor? Where

What is does the
poor live?
Why is there
poverty in
poverty?
the world?
How can we end
6
poverty?
What is poverty?
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 is a multi-faceted phenomenon which affects not

only the ability to purchase goods, but also vulnerability
towards various pressures that may prohibit an individual
from enjoying life. This vulnerability may be gauged from
living conditions such as employment, health, education,
and housing.

Poverty typically is measured by purchasing power or per

capita expenditures made by the household, in the form
of poverty rates or expenditure quintiles.

Purchasing power has a strong correlation to most other

living condition indices and is therefore used as a main
indicator of poverty and vulnerability.

Source: https://www.investopedia.com/terms/p/poverty.asp
https://blogs.worldbank.org/opendata/dataviz-remake-fall-extreme-poverty-best-news-world https://ourworldindata.org/poverty
 Extreme (absolute) Poverty Line
Poverty line signals to researchers where poverty is and becomes
the first place to start in analysing poverty in a certain country,
within a certain economic group.

As differences in price levels across the world evolve, the global

poverty line has to be periodically updated to reflect these
changes. In September 2022 the international poverty line was
updated from $1.90 to $2.15 per person/ day.

While the global extreme poverty rate may not be dramatically

different after the adoption of the new PPP and poverty line,
some regional and country rates may fluctuate considerably.

It is important to note, however, that the global poverty line is

used primarily to track global extreme poverty and to measure
progress on global goals set by the World Bank, the United
Nations, and other development partners. A country’s national
poverty line is far more appropriate for underpinning policy
dialogue or targeting programs to reach the poorest. Watch: Can extreme Poverty be
eradicated? - The Economist
Source: https://www.worldbank.org/en/news/factsheet/2022/05/02/fact-sheet-an-adjustment-to-global-poverty-lines#6
What is poverty?
Countries set very different poverty lines in order
to measure poverty in a way that is informative
and relevant to the level of incomes of their
citizens.

For instance, while in the United States a person is

counted as being in poverty if they live on less
than roughly $24.55 per day, in Ethiopia the
poverty line is set more than 10 times lower – at
$2.04 per day.

To measure poverty globally, however, we need to

apply a poverty line that is consistent across
countries. This is the goal of the International
Poverty Line which is set by the World Bank and
used by the UN to monitor extreme poverty
around the world.

The new extreme poverty line of $2.15 per person

per day, which replaces the $1.90 poverty line, is
based on 2017 PPPs.
Source: https://www.investopedia.com/terms/p/poverty.asp
https://blogs.worldbank.org/opendata/dataviz-remake-fall-extreme-poverty-best-news-world https://ourworldindata.org/poverty
 What is poverty:
Philippine perspective

1/ Poverty is a characteristic of the family. The total family income is divided by the family size to
get the per capita income and this is compared with the poverty threshold to determine if the
family is poor or not. Thus, if a family has been classified as poor, then all members of the family will
be counted as poor. In other words, a family cannot have poor and non-poor members; either all
members are poor or all members are non-poor. To illustrate, if a family has three members, one
fisherman, one government employee and one kid. Their total family income will be divided by three
and this will be compared to the poverty threshold. If it is below the poverty threshold, the family is
considered as poor. Hence, all members are poor.

Source: https://psa.gov.ph/infographics/subject-area/Poverty
 When did poverty peaked and declined: The last 200 years
Two centuries ago it was widely believed that
widespread poverty was inevitable (ahem! Malthus).
But this turned out to be wrong.

Economic growth is possible and poverty can

decline. Historian Michail Moatsos has produced a
global dataset that goes back two centuries (see
chart on the left). According to his research three-
quarters of the world lived in extreme poverty in
1820. This means they “could not afford a tiny space
to live, some minimum heating capacity, and food
that would not induce malnutrition.”

Pre-pandemic, global poverty has declined

continuously. But the trend was interrupted in 2020,
when poverty rose due to the disruption caused by
the COVID-19 crisis combined with the effects of
conflict and climate change.

Source: https://ourworldindata.org/extreme-poverty-in-brief ; Michail Moatsos (2021) – Global extreme poverty: Present and past since 1820. Published in OECD (2021), How Was
Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820, OECD Publishing, Paris, https://doi.org/10.1787/3d96efc5-en.
 Where does the poor live: Geographical Distribution

The new extreme poverty line of $2.15 per person per

day, which replaces the $1.90 poverty line, is based on
2017 PPPs.

Research indicates that the quality and quantity of

education, urban-rural location, racial group, gender,
health and employment status all impact on whether
somebody is poor or not.

Other factors include socio-economic factors, historical

legacy of a country, social and religious customs,
property rights, economic dependence, political
system/affiliations etc. This is where much debate
about poverty lies.

Source: https://blogs.worldbank.org/opendata/dataviz-remake-fall-extreme-poverty-best-news-world
https://www.worldbank.org/en/news/press-release/2020/10/07/covid-19-to-add-as-many-as-150-million-e xtreme-poor -by-2021
Where does the POOREST live: Sub-Saharan Africa

Sub-Saharan Africa is the poorest region in the world.

Almost 40% of its population lives in extreme poverty.

Not all African countries are struggling, in fact most

African countries have achieved good growth after the
end of the oppressive colonial regimes that hindered
the growth of African economies. But in a number of
countries the situation is particularly bad. These
countries remain as poor as they were in the past. Since
the economy is stagnant, poverty is too.
Source: https://ourworldindata.org/extreme-poverty-in-brief
Where does the poor live: Rural versus Urban Poverty
For most African and many Asian nations, most poverty is in
rural areas. But it is no longer so in Latin America (or Europe and
North America). Nor does the fact that there is more poverty in
rural areas mean that urban poverty should be ignored – and an
increasing proportion of those who suffer absolute poverty
worldwide live in urban areas.

Rural poverty: poverty occurring in agricultural areas or

provinces.

Urban poverty: poverty occurring in urban metropolises and

cities.
Typical consequences of poverty often seen in urban areas
include alcohol and substance abuse; less access to education;
poor housing and living conditions, and increased levels of
disease.
Heightened poverty is likely to cause increased tensions in
society, as inequality increases. These issues often lead to rising
Great urbanization over the past several decades
has led to the phenomenon coined as “the
urbanization of poverty.” The name generally
refers to the migration of poor communities from
rural areas into urban centers in the hopes of
greater opportunity and increased quality of life.
Source: https://borgenproject.org/urban-poverty-and-rural-poverty/

crime rates in urban communities.

Rural Poverty
• In Africa, 60 % of the population living in rural areas as of
2014.
• In Asia where structural transformation were more
advanced, some rural people – especially those operating
on remote and marginal farmlands not connected to
urban markets – have been left behind in the economic
transformation of previous decades.
• in Latin America pockets of rural poverty remain though
societies have largely urbanized. Agriculture contributes
to economic growth through domestic and export
surpluses that can be tapped for industrial development
through taxation, foreign exchange abundance, outflows
of capital and labor, and falling farm prices.
• CHILD POVERTY IN RURAL AREAS: the prospects of
children and youth in rural areas are often held back
compared with children in urban areas: they are more
likely to be out of school5 and to be involved in child
labour, most of which is concentrated in agriculture
Source: IFAD

Images retrieved from: http://www.fao.org/reduce-rural-poverty/en/

 Rural and Urban Differentials

Urban populations are, on average, happier

than rural populations in that they return
higher levels of happiness.

The differences found can primarily be

explained by higher living standards and
better economic prospects in cities,
especially for those with education.

While the relative importance of these

place and people effects may vary from
country to country, urban-rural differences
in well-being were shown to be strongly
dependent on development level.

16
 Where does the poor live:
Philippine perspective

Source: https://psa.gov.ph/infographics/subject-area/Poverty
 Who are the poor?

Common traits for those living in extreme

poverty include having little or no education,
work in manual low-income jobs like in farming
or agriculture sector.

In many developing countries the poor tend to

be Black, female, young, rural, unskilled and
perhaps semi-skilled.

For certain members of society, mainly women

and children, they may already lack political, The World Bank’s extreme (absolute) poverty
social or economic rights meaning poverty definition says, "A person is considered poor if his or
places a double burden on them, making them her income level fall below some minimum level
even more vulnerable. Globally, 1 in 5 girls are necessary to meet basic needs.” It sets this minimum
married before age 18, ending their chances of level, or international poverty line, as living on less
an education. than $2.15 a day.

Source: https://blogs.worldbank.org/opendata/dataviz-remake-fall-extreme-poverty-best-news-world https://www.worldbank.org/en/news/press-release/2020/10/07/covid-19-to-add-as-

many-as-150-million-extreme-poor-by-2021
 Who are the poor: Female poverty
Poverty has a female face. New projections of
global poverty by UN Women, UNDP and the
Pardee Center for International Futures estimate
that, globally, 388 million women and girls will be
living in extreme poverty in 2022, compared to 372
million men and boys (report as of Feb 2022).

But the outlook could be far worse. In a “high-

damage” scenario, this number could balloon to
446 million.

Based on a sample of 186 countries. 62.8% of

extreme poor women live in Sub-Saharan Africa,
20.9% in Central and Southern Asia, 5.3% in Latin
America and the Caribbean, 5.1% in Northern Africa
and Western Asia, 4.8% in Eastern and South-
Eastern Asia, 0.8% in Europe and Northern America,
0.3% in Oceania (excluding Australia and New
Zealand) and 0.01% in Australia and New Zealand.

Source: https://data.unwomen.org/features/poverty-deepens-women-and-girls-according-latest-projections
 Gender Inequality and Poverty
Gender inequality is now recognized as being the most
pervasive inequality worldwide. There is no country in the
world where women enjoy the same opportunities as men.

Measuring Gender Inequality

Gender Inequality Index (GII) uses metrics such as women's

reproductive health status, empowerment, and labour market
participation in comparison to men’s to measure the gender gap.
includes maternal mortality rates (from UNESCO) and women's
parliamentary representation.

The GII value increases as gender inequalities increase. One of the

major advantages of the index is seen to be the ability for it to
capture the linkages across different dimensions for example
schooling and access to work.

The GII does not however capture other relevant dimensions such
as time-use, access to assets, domestic violence, and local- level
empowerment (UNDP 2010 p. 90)

Source: Source: https://www.investopedia.com/economic-inequality-4845459 https://ourworldindata.org/global-economic-inequality

 Who are the Poor: Child Poverty
The impact that poverty has on children is
substantial. Children who grow up in poverty
typically suffer from severe and frequent health
problems while infants born into poverty have an
increased chance of low birth weight, which can
lead to physical and mental disabilities.

In some impoverished countries, poverty-stricken

infants are nine times more likely to die in their
first month compared to babies born in high-
income countries. Those who live may have
hearing and vision problems.

As a result, children in poverty tend to miss more

school due to sickness and endure more stress at
home. Homelessness is particularly hard on
children since they often have little to no access to
healthcare and lack proper nutrition— which often
results in frequent health issues that cary on until
adulthood.
Source: https://www.unicef.org/social-policy/child-poverty
 Who are the
poor:
Philippine
perspective

Source: https://psa.gov.ph/infographics/subject-area/Poverty
Case Study: Causes of female youth poverty in Zimbabwe
Zimbabwe has experienced severe economic collapse with little prospect of improvement in the near future. Extremely high
unemployment, hyperinflation, food shortages, instability, and personal insecurity are facts of everyday life. The incidence of
HIV/AIDS has had severe economic and social consequences including family disruption and life expectancy had fallen to a
mere 38 years by 2001.

The transition from childhood to adulthood has always been important for young women's futures but the nature of this
transition in Zimbabwe, as in many other sub-Saharan settings, has been radically altered by processes of development that
create new vulnerabilities for young women. Traditional pathways to adulthood have been transformed by school attendance
which forces young women to take responsibility for their daily survival earlier on whilst delaying marriage and
childbearing until later. School attendance promotes a new pathway to adulthood through economic independence offered
by paid employment. Young women and their parents invest heavily in schooling as a route to paid employment with the
expectation that young women will work hard to realise this goal and be able to repay or support parents in return. However,
these expectations are rarely realised and most end up in low-end, low-skill gender-specific activities or unemployed. Despite
their ambitions, the reality is that many young women lack the skills and training necessary to earn a decent living. Many ha ve
been disadvantaged by inappropriate school curricula, poor quality education, and intermittent attendance because of
financial difficulties. As a result these young women are often out of school and lack the resources for other courses or
training.

Immediate and extended family support for young women is very limited given their own increasing difficulties in making
ends meet. The unrealistic expectation that education will enable young women to determine their own life course also has a
psychological cost by casting young women as failures.

Source: summarised from Grant (2006) and Ansell (2004) pp. 183-202.
Why is there poverty: Causes and determinants

Research indicates that the quality and quantity of

education, urban-rural location, racial group, gender,
health and employment status all impact on whether
somebody is poor or not.

Other factors include socio-economic factors, colonial

past or historical legacy of a country, social and religious
customs, property rights, economic dependence, political
system/affiliations.

Social conditions such as health, nutrition, education and

housing influence productivity and affect poverty status.
These in turn are influenced by poverty, affecting the
ability of households to gain access to adequate social
conditions to improve their productivity.

There is a large, positive correlation between

unemployment and poverty; as well as between gender
and poverty.

Image sourced from: https://www.issuesonline.co.uk/articles/10-solutions-to-global-poverty-that-can-be-implemented-today

 How does the poor live: Consequences of Poverty
Poverty is not just the lack of money. Consequences of
Poverty
The poor people possess few economic assets and
often lack basic literacy skills that limits their • Low income
current and future income- earning opportunities. • Dependence
• Drug abuse
Poverty-stricken people and families might go • Starvation
without proper housing, clean water, healthy
food, and medical attention. • Illness & spread of
diseases
Low-income families are also more vulnerable to • Mental health
climate catastrophes and more likely to fall into issues
criminality. • Inability to afford
hospital
“Poor people live without fundamental freedoms treatment
of action and choice that the better-off take for • High crime rates
granted. They [suffer] deprivations that keep them • Adverse working
from leading the kind of life that everyone values.
They also face extreme vulnerability to ill health, conditions
economic dislocation, and natural disasters. And • Poor housing &
they are often exposed to ill treatment by . . . the living conditions
state and society.” – World Bank, 2001. • Increase of
probability for
conflicts and wars
Source: https://blogs.worldbank.org/opendata/dataviz-remake-fall-extreme-poverty-best-news-world
https://www.worldbank.org/en/news/press-release/2020/10/07/covid-19-to-add-as-many-as-150-million-e xtreme-poor -by-2021
• Terrorism
How do we end poverty: Gov’t Policies and Programs
Broad Areas of Interventions
Human Capital Investment:
• Education and Training
• Health and Nutrition
Increasing Productivity and Efficiency
Transfers and Subsidies
Capital Formation
Research, Technology and Innovations
Climate resilience and sustainability
Some specific examples
• Building new / more schools, clinics and hospitals
especially in rural areas
• Increasing salaries of teachers and health workers
• Kto12 and tech voc programs
• Solving traffic congestion and mobility issues with public
transportation
• Competitive business policies; fiscal incentives to attract
foreign investments
• Conditional Cash Transfers (Pantawid Pamilya Program)
• Subsidies and giving credits to farmers or nascent
industries
• Increasing access to financial market
• Application of technology to improve agricultural yield
• Increasing pool of scientists, engineers
• Promoting and protecting Biodiversity
• Phasing out coal and transitioning to renewable energy
 Poverty versus Inequality

POVERTY is a “pronounced deprivation in well- INEQUALITY refers to disparities in areas such as

being”. income, wealth, education, health, nutrition,
space, politics, and social identity.
• Income or consumption poverty refers to lack of
monetary resources to meet needs. • Intersecting inequalities occur when people face
• Absolute (extreme) poverty is poverty below a set inequality in multiple aspects of their lives.
line of what is required to access minimum needs for • Vertical inequalities occur between individuals.
survival. • Horizontal inequalities occur between groups.
• Relative poverty is set in relation to others. • Inequality of outcomes refers to differences in what
• Shelter poverty, food poverty, asset poverty, time- people achieve in life (e.g. level of income).
poverty or health poverty refer to lack of that • Inequality of opportunities refers to differences in
specific good. people’s background or circumstances that condition
• Multidimensional poverty recognizes the many what they are able to achieve.
different ways in which people can be deprived. • Global inequality refers to difference in income
• The transiently poor move in and out of poverty. between all individuals in the world rather than
• The chronically poor are poor for years at a time or inequalities between countries.
event their whole lives.
• Vulnerability to poverty is the probability or risk of
being.
Source: https://gsdrc.org/topic-guides/poverty-and-inequality/measuring-and-analysing-poverty-and-inequality/defining-poverty-extreme-poverty-and-inequality/
The BIG Questions

How do you measure What is

inequality?
income
What are the Causes,
Cases and Consequences inequality?
of income inequality?
How can we reduce
28
inequality?
 Inequality
Inequality can be viewed from different perspectives, all of
which are related. Most common metric is Income Inequality,
which refers to the extent to which income is evenly
distributed within a population.

Related concepts are lifetime Inequality (inequality in

incomes for an individual over his or her lifetime), Wealth
Inequality (distribution of wealth across households or
individuals at a moment in time), and Inequality of
Opportunity (impact on income of circumstances over which
individuals have no control, such as family socioeconomic
status, gender, or ethnic background).

All of these inequality concepts are related and offer different

yet complementary insights into the causes and
consequences of inequality, hence providing better guidance
to governments when designing specific policies aimed at
addressing inequality.

Source: Source: https://www.investopedia.com/economic-inequality-4845459

https://ourworldindata.org/global-economic-inequality https://ourworldindata.org/grapher/economic-inequality-gini-index
 Income Inequality
Inequality is at the center stage of economic policy
debate across the globe. A fair and equitable
distribution of income is a fundamental element of the
social contract.

Macroeconomic policies (including government tax and

spending policies) have significant effects on income
distribution and that inequality can have adverse
political and social consequences, with the potential to
undermine macroeconomic stability and sustainable
growth.

Income inequality refers to how unevenly income is

distributed throughout a population. The less equal the
distribution, the greater the income inequality. Income
inequality is often accompanied by wealth inequality,
which is the uneven distribution of wealth.

Source: Source: https://www.investopedia.com/economic-inequality-4845459

https://ourworldindata.org/global-economic-inequality https://ourworldindata.org/grapher/economic-inequality-gini-index
 Measure of Income Inequality: Gini coefficient
Gini coefficient (Gini index): measure of the
distribution of income across a population
developed by the Italian statistician Corrado
Gini in 1912.

It is often used as a gauge of economic

inequality, measuring income distribution or,
less commonly, wealth distribution among a
population.

The coefficient ranges from 0 (or 0%) to 1 (or

100%), with 0 representing perfect equality and
1 representing perfect inequality. A higher Gini
index indicates greater inequality.

Because of data and other limitations, the Gini

index may overstate income inequality and can
obscure important information about income
distribution

Source: Source: https://www.investopedia.com/economic-inequality-4845459

https://ourworldindata.org/global-economic-inequality https://ourworldindata.org/grapher/economic-inequality-gini-index
 Gini Coefficient and Lorenz Curve Together

Lorenz Curve: the graphical / visual representation

of income or wealth distribution within an
economy. It is developed by American economist
Max Lorenz in 1905.

It is drawn as a cumulative income curve where

population is divided into quintiles:

• The richest quintile is the 20% of households

with the highest disposable income
• the poorest quintile is the 20% of households
with the lowest disposable income.

The Lorenz Curve can be contrasted with the line

of perfect equality to show the scale of income
and wealth inequality in a country.

Source: https://www.economicshelp.org/blog/glossary/lorenz-curve/
 Causes of Inequality
A range of global and domestic factors— which may reinforce each
other — have been proposed in the theory and empirical literature to
account for the income inequality trends. The key forces include the
following:

• Global factors, such as technological progress, globalization, and

commodity price cycles, play an important role. For instance,
technological advancement has contributed to the skill premium,
because individuals with higher education have a comparative
advantage in using new technologies (Card and DiNardo, 2002). In
Western Europe and the United States, technological progress has
also translated into a hollowing out of middle-class jobs, a
phenomenon known as job polarization (Goos and Manning, 2007).
• Country-specific factors, such as those related to economic
developments and economic stability as well as to domestic policies
— including financial integration, redistributive fiscal policies, and
liberalization and deregulation of labor and product markets — also Image source: https://www.bostonglobe.com/opinion/2014/09/08/editorial-cartoon-touring-income-
gap/oWvJgYzvrsGLN9Reoy3SyI/story.html
play an important role in explaining inequality trends within
countries.

Source: https://www.imf.org/en/Topics/Inequality/introduction-to-inequality
Cases of Inequality
Global inequality has been declining fast since 1990s. During the
nineteenth and most of the twentieth centuries, global inequality
increased dramatically, reflecting widening disparities between
countries’ per capita income as advanced economies took off sharply
compared with the rest of the world.

The revival in global economic cooperation in the middle twentieth

century ushered in an era of growth and development. Subsequently, per
capita GDP growth rates accelerated in less developed countries,
particularly in Asia, resulting in convergence in income levels across
countries (Bourguignon, 2015).
Millions of households were lifted out of poverty. As a result, the global
income inequality first stabilized and then started to rapidly decline over
the last three decades. GLOBAL INCOME INEQUALITY (GINI COEFFICIENT)
Sources: Historical series are from Van Zaden and others (2014), who build on Bourgui-gnon and
However, it should be noted that not all regions of the world experience Morrisson (2002). Recent data is from Lakner and Milanovich (2013

income convergences with more developed countries. In Sub-Saharan

Africa, for instance, income growth on average was more modest than in
Asia. Some gains in the reduction of global inequality are likely to be
reversed as a result of the COVID-19 crisis. It will likely deteriorate global
inequality because advanced economies, in general, have more
resources to deal with the fallout from the pandemic and the ensuing
recovery effort.
Source: https://www.imf.org/en/Topics/Inequality/introduction-to-inequality
Cases of Inequality
Within-country inequality has risen in most countries. While the progress in the
reduction of global inequality over the last 30 years has been remarkable, within
country inequalities have increased, especially in advanced economies. Over the
past three decades, more than half of the countries and close to 90% of advanced
economies have seen an increase in income inequality, with some countries
recording an increase in their Gini coefficients exceeding two points. Some of key
factors behind the increase in within-country income inequality noted in the
literature include technological progress, globalization, commodity price cycles,
and domestic economic policies such as redistributive fiscal policies, labor and
product market policies.

Rising social spending has been used to combat inequality. Fiscal policy is a key
policy instrument available to governments to achieve their distributional
objectives. In advanced economies, taxes and transfers decrease income
inequality by one-third, with most of this being achieved via public social
spending such as pensions and family benefits. The extent of fiscal redistribution
is even higher if the redistributive impact of in-kind spending such as education
and health are included. Progressive income taxes also play an important
redistributive function in some countries. The lower redistributive impact of fiscal
policy in developing economies is also a key factor behind their high levels of
inequality. Sources: https://www.imf.org/en/Topics/Inequality/introduction-to-inequality
https://www.ibon.org/luzon-income-inequality-in-the-time-of-covid-19/
Consequences of Inequality
While some inequality is inevitable in a market-based economic system as a
result of differences in talent, effort, and luck, excessive inequality could erode
social cohesion, lead to political polarization, and ultimately lower economic
growth (Berg and Ostry, 2011; Rodrik 1999).

1. Less equal societies have less stable economies. High levels of income
inequality are linked to economic instability, financial crisis, debt and
inflation.
2. Unequal societies have less social mobility and lower scores in maths,
reading and science.
3. Inequality increases property crime and violent crime. A reduction of
inequality from Spanish levels to Canadian levels would lead to a 20%
reduction in homicides and a 23% reduction in robberies.
4. Living in an unequal society causes stress and status anxiety, which may
damage your health. In more equal societies people live longer, are less
likely to be mentally ill or obese and there are lower rates of infant
mortality.
5. Inequality affects how you see those around you and your level of
happiness. People in less equal societies are less likely to trust each other,
less likely to engage in social or civic participation, and less likely to say
they're happy.
Sources: https://www.imf.org/en/Topics/Inequality/introduction-to-inequality
https://equalitytrust.org.uk/about-inequality/impacts
 Reducing Inequality
There are variety of fiscal policy instruments to achieve equity goals in an
efficient manner. An important lesson is that with the right design,
government tax and spending policies can help achieve both stronger
growth and greater equality of outcomes and opportunities.

Even in the design of fiscal consolidation, a number of options can help

reduce budget deficits without aggravating inequality. These include
measures to raise revenues from income taxes and targeted (rather than
across-the-board) reductions in social benefits. Measures that are good for
both equity and efficiency — for example, income redistribution and
increase in revenues from property taxation — should also be given strong
consideration when designing fiscal consolidation packages.

* Income redistribution aims to promote economic stability and

possibilities for society's less affluent members (essentially narrowing the
gap between the poor and the wealthy), and so frequently includes
financing for social services. Because these services are paid by taxes,
people who advocate for income redistribution claim that higher taxes for
the richer members of society are necessary to best support public
programs benefiting those who are underprivileged.

Sources: https://www.imf.org/en/Topics/Inequality/introduction-to-inequality https://www.studysmarter.co.uk/explanations/microeconomics/poverty-and-inequality/income-

redistribution/#:~:text=Income%20inequality%20refers%20to%20how,the%20income%20inequality%20that%27s%20present.
FURTHER ACADEMIC REFERENCES:
LECTURE-THEMED FILM LECTURE-THEMED BOOK
Extreme poverty: how far have we come, how far do RECOMMENDATION: RECOMMENDATION:
we still have to go?

An Adjustment to Global Poverty Lines – September

2022

Philipines- poverty statistics

Economic inequality by gender

Effects of Poverty, Hunger and Homelessness on

Children and Youth

Why do the Poor live in cities: the role of public

transportation
LECTURE-THEMED MUSIC
7 things you should know about poverty and housing
RECOMMENDATION:
What is the Gini Coefficient?
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Now you know.. So what?
1. Inform yourself: pay attention to what is happening, read up on current
events and issues, develop your critical analytical skills and fact-check all
the time.

2. Get political and use your social media for good: raise awareness on
poverty related issues, share verified information only, avoid hateful
language.

3. Share your ideas, time and money: If you want to reduce global
inequality and support poorer people, you can donate some of your
money. You might be able to live on a little less, and this money could
make a big difference to a poorer person. The most direct way is to send
some of your money to poor people; the non-profit
organization GiveDirectly makes this possible. Or you can donate to
an effective charity that supports the world’s poorest. Volunteer in
causes you care about but do it out of sincerity not for publicity.

4. Invest in your education and character: walk the talk, be a productive

member of society and positive contributor to economy.

5. Live in constant gratitude.

Source: https://www.un.org/sustainabledevelopment/poverty/
https://borgenproject.org/10-ways-to-help-the-worlds-poor/
https://www.quora.com/How-do-you-know-you-are-rich-and-what-is-the-first-thing -people-do-when-they-become-rich