It is important to understand the drivers of poverty and inequality to combat them effectively.
Drivers of poverty
Lack of inclusive economic growth and jobs, insecure jobs and low wages, and limited livelihoods and opportunities, result in poverty and the inability to escape poverty (Haughton & Khandker, 2009; Handley et al., 2009; Shepherd, 2011; von Braun et al., 2009). High levels of inequality can also impede poverty reduction by undermining the sustainability of economic growth, and through its negative impacts on human capital and unexploited talent, institutional legitimacy and social cohesion (Poverty Analysis Discussion Group, 2012; World Bank, 2006). Poor governance can sustain poverty and make it difficult to generate pro-poor growth and to create institutions to tackle problems (Handley et al., 2009). A weak civil society makes it harder to hold governments to account on their measures to address poverty and inequality (Handley et al., 2009). Lack of respect for human rights can cause multidimensional poverty through denial of the right to education, health, or livelihoods (Handley et al., 2009; von Braun et al., 2009).
Shocks, especially in combination or in a sequence, together with low levels of resilience can lead to extra expenses that plunge households into poverty. Shocks are a major driver of vulnerability and important factors push into poverty, while also serving to keep people poor. Shocks include harvest failures, natural disasters, food price increases, market failures and volatility, conflict and displacement, and health shocks (Shepherd, 2011; Handley et al., 2009; Poverty Analysis Discussion Group, 2012; von Braun et al., 2009). Conflict causes serious disruption to people’s lives and impedes countries’ growth (Handley et al., 2009; von Braun et al., 2009). Climate change is increasing the risk of some of these shocks (von Braun et al., 2009; Chant, 2010; Shepherd et al., 2013). The global recession has increased the numbers of people in poverty as a result of falling employment, reduced real wages, and declining remittances (von Braun et al., 2009).
As a result of discrimination, and historical and current exclusion from resources, people experiencing gender, ethnic, and racial and other inequalities often experience poverty. For example, households headed by women may be poorer because they often have low levels of literacy, are paid lower wages, and have less access to land or equal employment (Handley et al., 2009; von Braun et al., 2009; Haughton & Khandker, 2009; Koser in Chant, 2010). Low capabilities, including in relation to health and nutritional status, human capital (education and skills), and physical and social assets (shelter, land, access to a social networks etc.) determine people’s ability to generate income and increase the chances of poverty and the intergenerational transmission of poverty (Handley et al., 2009; Behrman et al., 2013; von Braun et al., 2009; Haughton & Khandker, 2009). As a result of the constraints imposed on them by extreme poverty (lack of credit, high vulnerability to external shocks, lack of energy, few observations of others’ success), people can behave in a way that traps them in poverty (von Braun et al., 2009).
It is important to understand the root causes of poverty as well as the immediate or proximate causes (Haughton & Khandker, 2009; World Bank, 2013). For example, if low levels of education cause poverty it is important to understand why people have low levels of education (Haughton & Khandker, 2009). The root causes of poverty are not necessarily the same in every country (Haughton & Khandker, 2009, p. 147; Handley et al., 2009).
Drivers of inequality
Domestic policies on taxation and finance, arising as a result of what different actors perceive to be ‘just’ and what is not, can encourage divergence towards a high level of inequality (Piketty, 2014). Inadequate regulation of financial integration and trade liberalisation processes can result in the unequal distribution of benefits across and within countries (UNDP, 2013; UNICEF & UN Women, 2013). Depending on how they are carried out, interventions that weaken labour market institutions or result in a downsizing of public investments in critical sectors like health, education and social protection may drive inequality (UNDP, 2013; UNICEF & UN Women, 2013).
Recent research indicates that a major driver of inequality today is the tendency of returns on capital to exceed the rate of economic growth which means those with capital are able to accumulate wealth quicker than the rest of the population (Piketty, 2014). Income inequality drives inequality in other dimensions of material well-being, such as education and health (UNDP, 2013). The intersecting nature of inequality can cause it to persist (UNDP, 2013).
Exclusion from markets (land, housing, labour, credit), services (social protection, information, electricity, transport, education, health, water), and spaces (political, physical, cultural, social) result in inequalities (World Bank, 2013). Lack of adequate investment in training can exclude entire social groups from the benefits of economic growth (Piketty, 2014). Discriminatory structures in the economic sphere (distributive inequalities), the social sphere (status inequalities), the political sphere (representational inequalities), and the cultural and environmental spheres can systematically disadvantage some social groups, particularly certain subcategories of women (UNICEF & UN Women, 2013; UNICEF et al. 2014; UNDP, 2013; World Bank, 2006).
Economic, political, and social inequalities tend to reproduce themselves over time and across generations, forming ‘inequality traps’ (World Bank, 2006).
- Behrman, J. R., Schott, W., Mani, S., Crookston, B.T., Dearden, K., Duc, L.T., … & the Young Lives Determinants and Consequences of Child Growth Project Team. (2013). Intergenerational transmission of poverty and inequality: Young lives (Working Paper 117). Young Lives. University of Oxford.
- Chant, S. (Ed.). (2010). The international handbook of gender and poverty: Concepts, research, policy. Cheltenham, UK: Edward Elgar.
- Handley, G., Higgins, K., & Sharma, B. (2009). Poverty and poverty reduction in Sub-Saharan Africa: An overview of key issues (Working Paper 299). London: ODI.
- Haughton, J., & Khandker, S. R. (2009). Handbook on poverty and inequality. Washington, DC: World Bank.
- Piketty, T. (2014). Capital in the twenty-first century. London: The Belknap Press of Harvard University Press.
- Poverty Analysis Discussion Group. (2012). Understanding poverty and wellbeing – A note with implications for research and policy. London: DFID.
- Shepherd, A., Mitchell, T., Lewis, K., Lenhardt, A., Jones, L., Scott, L., & Muir-Wood, R. (2013). The geography of poverty, disasters and climate extremes in 2030. London: ODI.
- Shepherd, A. (2011). Tackling chronic poverty: The policy implications of research on chronic poverty and poverty dynamics. Chronic Poverty Research Centre.
- UNDP. (2013). Humanity divided: Confronting inequality in developing countries. New York: UNDP.
- UNDP. (2013). Humanity divided: Confronting inequality in developing countries. New York: UNDP.
- UNICEF, & UN Women. (2013). Global thematic consultation on the post-2015 development agenda: Addressing inequalities – Synthesis report of global public consultation. UNICEF & UN Women.
- UNICEF, UN Women, UNDP, & OHCHR. (2014). TST issues brief: Promoting equality, including social equity. UNICEF, UN Women, UNDP & OHCHR.
- Von Braun, J., Vargas Hill, R., & Pandya-Lorch, R. (Eds.). (2009). The poorest and hungry: assessments, analyses and action: An IFPRI 2020 book. Washington, DC: International Food Policy Research Institute.
- World Bank. (2006). World development report 2006: Equity and development. New York: Oxford University Press for the World Bank.
- World Bank. (2013). Inclusion matters: The foundation for shared prosperity. Washington, DC: World Bank.
