Why is it so hard to escape poverty? - Ann-Helén Bay - Deepstash

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Governmental welfare programs inadvertently reinforce generational poverty. Here’s how they attempt to fix it.

Why is it so hard to escape poverty? - Ann-Helén Bay

Why is it so hard to escape poverty? - Ann-Helén Bay

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Government benefit programs unwittingly produce poverty traps

Imagine you're out of work and a government benefit program helps you with your basic needs, such as rent, utilities and food. 

When you finally get a job, you feel things are turning around, except that you are now disqualified from the benefit program and don't earn enough to cover the sa...

Financial stability is overlooked

Some poverty traps are connected to a person's circumstances, such as lack of access to healthy food or education. Others affect entire nations, such as cycles of a corrupt government.

The irony of welfare traps is that they are the result of policies designed to fight poverty

Mainstream economic models assume people are rational. If those in poverty know they won't gain any advantage from working, they're incentivised to continue with government assistance. 

When fewer people take on new jobs, the economy slows down, keeping people in poverty.

Attempts to remove the feedback loop

Countries have tried various ways to circumvent the problem. 

  • Some allow an overlap of benefits after finding a job, while others phase out benefits gradually as income increases.  These policies remove some financial incentives to work but the risk of the welfare tra...

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