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Lecture 9 Poverty

Terms in this set (25)

Annual Income
The amount of money a person, family, or household makes in a given year.
Wealth
Total net value of assets. House(s), personal property, cash, stocks, bonds, etc.
Two Poverty Concepts:
1. Absolute Poverty
2. Relative Poverty
Absolute Poverty
Divides the poor from the non-poor by using some objective standard, such as the lack of money to purchase adequate food, shelter, clothing.

If the income is below a certain amount the family is classified as poor.
Relative Poverty
This approach holds that people are poor if they have significantly less income and wealth than the average person in their society.

This approach is based on the notion of relative deprivation of bring so far removed from the average income standard that one cannot feel part of the society.
The lowest poverty rate
11.1% in 1973
The poverty rate in 2010
15%
The Persistently Poor
Those below the poverty line for 8 consecutive years.
The Adjusted Poverty Rate
Takes into account non-cash benefits (food stamps, medical care, etc.) provided by the government.
What are the 3 factors important for changes in income distribution?
1. Structural changes in the economy towards high-tech services-based employment

2. Changing Demographics - a lot of people are retiring or a lot of old people are working those jobs and young people cannot get those jobs.

3. Changing Tax Structures - the rich do not have to pay as much in taxes as they used to.
The top 20% and 5% collective what percent of all household income respectively?
50% and 22%
When did the highest concentration of of family wealth in the US occur?
1929
How has the concentration of wealth changed over time?
High in the 1920s, went down in the great depression, went back down in the 60s, high in the 80s, high again in the 90s, and increased again.
What are some risk factors of poverty and how do they operate?
1. Age
2. Family Structure
3. Ethnicity
4. Area of Residence
5. Length of Poverty
6. Physical Disabilities and illiteracy
Age
Children are at risk of being poor
Familly structure
single mothers are more likely to be poor
Ethnicity
Minorities are more likely to be poor
Area of Residence
Rural area youre more likely to be poor
Length of poverty
once youre poor youre more likely to stay poor
physical disabilities
this reduces employability and earnings potential and therefore increases the risk of poverty
Major Causes of Poverty
1. Economic Recession, Unemployment and structural changes -- an unemployment rate generally shocks a family's income level; unemployment rates go up during a recession and so does the poverty rates.

2. Family instabilities -- high divorce, separation and teenage birth rates account for much short-term poverty.

3. The Functions of Poverty -- poverty is valuable to the rich, the powerful, and corporate/business America; it ensures that dirty work gets done, prices remain low for consumers.
What are the societal responses to poverty?
1. Reduce unemployment, create jobs
2. Taxes and income redistribution
3. Raise the minimum wage
4. Work incentives and guaranteed annual income
5. Special programs for, and problems of single mothers
6. The welfare system reforms of 1996 and workfare programs
Swedish Model
reduces female poverty primarily through high rates of female employment -- about 90% and about the same level as male employment in Sweden as compared to 64% for females and 82% for males in the US.
Italian Model
The key is very high rates of marriage. 2.4% of females in Italy are single parents vs. 14% in the US.
Netherlands Model
A low poverty rate is attributable to a generous welfare system that puts a relatively high income floor beneath which no citizen is allowed to fall.
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