Consequences of inequality & poverty
for economic growth
for living standards & social stability
large gaps between income groups provide incentives
to work harder
improve their education and skills
more equality means a smaller gap but less incentives
high levels of investment are needed for the economy to grow
inequality harms economic growth
fewer opportunities for lower income groups -> vicious cycle
children from lower background lack opportunities
leads to lower productivity levels
social & political instability is often associated with high levels of poverty
inequality is damaging for everyone, not just the poor
resentment and hostility may be high where people are living in extremely disadvantaged circumstances
neighbourhoods and areas of cities may become identified by their income groups
people living in relative poverty are unlikely to support the political and democratic process
people living in poverty must make hard choices about ways to use their limited income
fuel
education
food
transportation
may be self-perpetuating
government-subsidised areas will be concentrated with low income earners
low income areas
less likely to have goods schools & attract good teachers
education prospects suffer
poor infrastructure & facilities
limits opportunities for residents
leads to social tension & increased criminal behaviour
increased gang-related activities
residents may feel unsafe
law enforcements may not be able to deal with the dangers
young people feel discouraged as they feel like they have no job prospects & legit ways to earn a living
give rise to unstable social & political climate & tension between low income earners & people who govern