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3.7 (extra) - Poverty - Coggle Diagram
3.7 (extra) - Poverty
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Causes of poverty
Unemployment
Out of work benefits include job seekers allowance and personal independence payment. They can only be claimed if your unemployment, you often have to prove your are trying to find a job a job as well.
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Disability
Disability benefits are similar to unemployment benefits except you have to be unemployed due to your disability.
Discrimination (race, gender etc...)
Old age
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This along with a triple lock (pension will increase by the highest of either inflation + 1%, earnings increase or 2.5%) system sloves old age poverty very well. But at a very high cost which is a problem because old people have a very low MPC and a very high MPS
Old people also get other benefits to help decrease old age poverty like free travel on busses, winter allowance and free TV licences
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IWB (in work benefits) aim to help people who are working on a low wage and can't support themselves or their family. IWB includes child support and housing benefits.
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BIK - Benefits in Kind
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BIK includes:
- schools and nurseries
- GPs and hospital
- merit goods
The principle here is very good, however, not all school , hospitals etc.. are of the same quality therefore causing some poverty
Rebuilding these facilities are very expensive buy will work in the LR and investment in education should bring down crime rates
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Increasing BIC and BIK are the standard approaches to solving poverty. However, other less standard solutions may work like:
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Freezing benefits (so they don't increase with taxes. This will provide less dependant on taxes in the long run and help those affected by poverty in the SR
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Reducing tax and benefits (supply side policy) which will lead to high levels of growth but doesn't help those who can't work in the SR
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