Poverty reduction policies
Poverty reduction policies need to be tailored to specific national and regional contexts, and require better data or better use of data to inform their design (CPRC, 2009). Poverty reduction is mainly about tackling the causes of poverty. Common drivers of poverty reduction relate to economic growth, job quality, social transfers, building capabilities, and tackling exclusion and inequality.
There are of a strong link between economic growth and poverty reduction, with some suggestion that a one percent increase in per capita income is associated with a one percent increase in the incomes of the poor, although this is debated and depends on how equal the growth is (Haughton & Khandker, 2009; Alexander, 2015). Economic growth is unlikely to be sufficient, and does not benefit all people equally – especially the chronically poor who tend to live in areas that lock them out of national growth processes (CPRC, 2009; Chant, 2010; Alexander, 2015; Bird et al., 2002). Research by the World Bank suggests that ‘as countries become less poor, inequality-reducing policies are likely to become relatively more effective for poverty reduction than growth-promoting policies’ (Olinto et al., 2014). Poverty reduction strategies tend to call for pro-poor or inclusive growth (Handley et al., 2009; Alexander, 2015). Pro-poor growth includes agriculture and rural development, market development and trade, and building an enabling environment (Handley et al., 2009; Haughton & Khandker, 2009; Banerjee & Duflo, 2011). Promoting inclusive growth requires policymakers to address both growth and income distribution, and to foster equality of opportunity, as well as to provide a social security net to protect the most vulnerable (Alexander, 2015). Anti-poverty measures include fostering opportunity, facilitating empowerment and addressing income security (Haughton & Khandker, 2009; Banerjee & Duflo, 2011; CPRC, 2009).
Research by the UN Secretariat’s Division for Social Policy and Development indicates that improvements in the wages of both skilled and non-skilled workers have helped lift millions of people out of poverty (UNDESA, 2013). However, research by the International Labour Organisation indicates that, as of 2013, progress on reducing numbers of working poor had stalled, given the higher numbers of people in vulnerable and informal employment, which involves low pay, limited job security, poor working conditions and little or no social protection.
Research since 2000 had led to wide recognition of well-designed social transfers as tool that address chronic and extreme poverty (Shepherd, 2011). However, care is needed to ensure that social transfers do not reinforce asymmetrical gender roles or add to women’s time burdens (Molyneux, 2008).
Reducing multidimensional poverty and income and non-income inequalities requires sustained investments in human capital, such as education and health, and food and nutrition security (Handley et al., 2009; UNDESA, 2013; World Bank, 2006). However, effects may be constrained intergenerationally. Research from Young Lives suggests that reducing poverty and inequality in the parents’ generation by increasing parents’ schooling and per capita consumption, is not likely to have much impact in reducing poverty in the next generation (Behrman et al., 2013).
Research by the Chronic Poverty Research Centre (2009) suggests specific policies and programmes are needed to target the poorest people and overcome the multiple barriers they face. This would include addressing the structural causes of chronic poverty, including social and political exclusion (von Braun et al., 2009). Tackling exclusion and inequality requires a focus on anti-discrimination and empowerment (CPRC, 2009). Research by Kabeer and Natali (2013), for example, suggests that work on gender equality can contribute to economic growth and speed up poverty reduction (Alsop and Healey in IPC, 2008). Redistribution of influence, advantage, or subsides away from dominant groups has been found to help reduce poverty (World Bank, 2006).
Inequality reduction policies
The complexity and multidimensionality of the drivers of inequality require a complex and multidimensional response with strong consensus at all levels (UNDP, 2013; UNICEF & UN Women, 2013; UNDESA, 2013; World Bank, 2013). Narrowing gaps in one area may not be sufficient to reduce disparities in other domains of well-being, as shown in the case of gender (UNDP, 2013; World Bank, 2013). Care is needed to ensure efforts to reduce inequalities do not increase them. Common drivers of inequality reduction relate to inclusive growth, investments in human capital, fiscal policies and redistribution, ensuring access to basic services and human rights, and tackling the root causes of discrimination and social, political, cultural and economic exclusion.
The World Bank has pledged to promote shared prosperity, looking at the incomes of the bottom 40 per cent, given widening inequality in some countries that have enjoyed strong economic growth. UNDP research shows that there is nothing inevitable about increases in inequality: several countries have managed to reduce income and non-inequality while achieving strong growth (UNDP, 2013). This entails open and responsive governments sharing the benefits of economic growth more equitably and increasing the capabilities, opportunities, and incomes of marginalised households and groups (UNDP, 2013; Kabeer, 2010; UNDESA, 2013; Ortiz & Cummins, 2011). Investment in training and skills and the diffusion of knowledge has been shown to reduce inequalities both within and between countries (Piketty, 2014).
Ensuring universal access to housing, water, sanitation and electricity, as well as essential social services such as nutrition, health, early childhood development, education and well-designed social protection is important for reducing poverty and promoting equality of opportunity (UNDESA, 2013; von Braun et al., 2009; Kabeer, 2010; World Bank, 2006).
Evidence indicates that progress at tackling inequality has been made in countries with adequate and sustained investment in children and adolescents, with early childhood development interventions focused explicitly on families affected by low income and deprivations (UNICEF & UN Women, 2013; World Bank, 2006).
Progressive income taxation, social transfers targeting education and health spending, and public child- and old-age benefits are fiscal policies that help promote equality (UNDESA, 2013; World Bank, 2006). Considering tax and spending programmes together enhances the effectiveness of fiscal redistribution, which can be carried out without hurting growth, or even while increasing it (Clements et al., 2015). Effective and fair redistribution can play a significant role in the equalisation of outcomes and opportunities, although it is not enough on its own (UNDP, 2013; see also Ortiz & Cummins, 2011; World Bank, 2006). Diverse employment opportunities, livelihood sustainability and decent work for all help address inequality (UNDESA, 2013). Expanding access to justice, land, and infrastructure, and promoting fairness in markets can help tackle inequality of opportunity (World Bank, 2006).
The structural drivers of inequality could be addressed by ensuring all people’s human rights are upheld (UNICEF & UN Women, 2013). Efforts to challenge the underlying attitudes and actions that perpetuate discrimination and social exclusion, including through anti-discrimination legislation, have helped combat inequality (UNDP, 2013; UNDESA, 2013; von Braun et al., 2009; UNICEF & UN Women, 2013; Kabeer, 2010). Progress has been made in countries that have put in place: explicit measures to combat discrimination by providing equal access and opportunity for disadvantaged and excluded groups; appropriate redistributive measures, including social protection, for disadvantaged groups; and provision for the specific needs of women and girls, children, persons with disabilities and minority groups (UNICEF and UN Women, 2013).
Taking action at a global level, as well as a national level, is also important for reducing inequalities of opportunity within countries and across the world (World Bank, 2006). This involves addressing inequalities in access to markets, resource flows, and in global governance, through the effective participation of poor countries (World Bank, 2006).
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- Alexander, K. (2015). Inclusive growth: Topic guide. Birmingham, UK: GSDRC, University of Birmingham.
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