4. Living: here and there

What it means to live in poverty depends on where in the world you are. Developed countries have their own brand of poverty that differs qualitatively from that in the developing world. ‘Living: here and there’ compares and contrasts five dimensions of life that underpin our notion of well-being: family structure, health, education, assets (financial and non-financial), and the environment. The focus is on qualitative characteristics that seem to persist over time, although some data are included in order to provide broader context. The consequences of family structure, health, education, assets, and the environment often manifest themselves in the labour market.

5. Labour markets

For most people, their performance in the labour market determines their station in life. What determines who earns what in the labour market? Are there systemic impediments that inhibit the ability of particular groups to prosper in the labour market? What is the role of education, skills, race, and gender? Are there ways to make the financial return on work greater regardless of skill level? If skills are lacking, are there policies that directly help to close skill gaps? ‘Labour markets’ considers these questions and concludes that a goal of labour market policy is to create pathways out of poverty. Well-functioning labour markets facilitate the economic mobility of people over the course of their lifetimes and across generations.

1. Introduction

Poverty is a global issue. There are people in every country with a standard of living that is significantly lower than that of others. Nevertheless, the absolute number of people living in poverty has decreased since 1990, especially in the poorest countries in the world. Therefore, there is reason to hope that further poverty reduction can occur. The Introduction outlines the pervasiveness and trends in poverty around the world; the many different causes of poverty that embed themselves in social, political, economic, educational, and technological processes, which affect all of us from birth to death; and considers why poverty matters. Overall, the economy suffers if systematic public policy does not address poverty.

8. Whither poverty?

A world without extreme poverty is still some way off, but there have been moments where some actual poverty reduction occurred. ‘Whither poverty?’ considers three of the post-1960 attempts to place poverty reduction on the public agenda: President Lyndon B. Johnson’s 1964 War on Poverty, the United Nations’ Millennium Development Goals set out in 2000, and their Sustainable Development Goals outlined in 2015. It concludes that the goal of action against poverty is the creation of a world where every individual’s opportunity to thrive (not just survive) can be independent of the circumstances of their birth, if they choose. Poverty matters because it is an obstacle to our progress, properly defined.

7. Combating poverty

Although poverty reduction has not occurred as fast as anyone would like, we know a considerable amount about what is helpful in the struggle against poverty. We also know a lot about what is not helpful. What seems to reduce poverty? What does not? Why have countries in East Asia and the Pacific excelled in poverty reduction, while sub-Saharan African countries and many developed countries have not? ‘Combating poverty’ considers the role of economic growth and inequality, the role of governance and institutions, markets and trade, social safety nets and social protection systems, infrastructure, foreign aid, the treatment of women and girls, and evaluation of the policies and programmes that reduce poverty.

3. Measurement

What do we mean when we say someone is living in poverty? Do we mean that their income is too low, that their consumption is too low, or that given their particular level of either, their ability to participate in society is severely restricted? Once a poverty line is set, other questions arise. Should our focus be on individuals or families? ‘Measurement’ considers different measures of well-being and explains the differences between absolute and relative concepts of poverty. For public policy purposes, we need simple statistics that summarize the state of affairs overall. Only by tracking such statistics over time can we determine whether our efforts to reduce poverty are paying dividends.

6. Distribution and mobility

We all start out in a given position in society and with a level of income (or wealth). What determines where we will end up? Will we be better off than our parents were? For people living in poverty, the ease or difficulty of movement across the income distribution of society is the difference between hope and despair. If movement is easy, society is seen as being fluid—a dynamic place to live and raise a family. If movement is difficult, society is seen as being rigid. This movement is measured in quintiles of the income distribution. ‘Distribution and mobility’ considers the distribution of income, lifetime mobility, poverty transitions, intergenerational mobility, and poverty traps.

2. History

Poverty is an ancient problem. In the pre-modern period, poverty was synonymous with hunger, but the kind of poverty we recognize today arose with the emergence of the market economy. ‘History’ considers the range of factors acting within and across societies that had negative effects on vulnerable people in different historical periods: the agricultural societies before the 16th century; societal and governmental responses to poverty during the 16th and 17th centuries; the effects of colonialism in the 18th and 19th centuries; globalization, industrialization, and the expansion of international trade in the late 19th and early 20th centuries; and the precursors to modern anti-poverty programs after the Great Depression of the 1930s.