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