Poverty and social inequality

Ateeq ur Rehman

BS Political Science 6th Semester

Roll No. 41

Department of Political Science

University of the Punjab

POVERTY AND SOCIAL INEQUALITY

Abstract:
Poverty and social inequality

This comprehensive literature review examines the complex interplay between economic inequality and
poverty, which are among the most urgent global issues. Although there has been considerable economic
growth around the globe, the ongoing disparities in wealth and income distribution continue to obstruct
efforts aimed at alleviating poverty. After a comprehensive study of academic works published between
2010 and 2023 this research highlights important themes such as inclusive economic growth, the effects
of globalization, educational disparities, and the role of government policies in tackling these challenges.
The results indicate that economic inequality intensifies poverty by restricting access to vital resources
and opportunities, thus maintaining cycles of deprivation. The review emphasizes the importance of
thorough, multifaceted policy measures—including progressive taxation, fair access to quality education,
and reforms in the labor market—to effectively diminish poverty and close the gap in economic
inequality.

Introduction:

Economic inequality and poverty rank among the most urgent challenges confronting both developed and
developing countries. Despite notable advancements in alleviating extreme poverty worldwide, the
increasing disparity in income has hindered the success of these initiatives, especially in areas undergoing
swift economic expansion. This combined dilemma necessitates a deeper comprehension of the
fundamental factors contributing to poverty and inequality, as well as a reevaluation of approaches to
tackle these concerns. Poverty extends beyond just insufficient income; it is a complex issue that includes
limited access to essential services like healthcare, education, and housing. Conversely, economic
inequality pertains to the uneven distribution of wealth and income within a society, frequently resulting
in unequal access to opportunities and resources. Tackling these interconnected challenges necessitates a
comprehensive strategy that transcends simple economic growth.
Poverty is defined as the condition of being unable to fulfill fundamental needs like food, shelter, and
healthcare, whereas economic inequality pertains to the disproportionate allocation of wealth and income
within a population. These challenges are intricately connected, as economic inequality frequently
worsens poverty by restricting access to vital resources, opportunities, and social mobility. The United
Nations Development Programme (UNDP, 2020) states that significant levels of inequality can result in
social unrest, economic inefficiency, and political instability. Furthermore, inequality hinders individuals
from enhancing their living conditions, thereby confining them within cycles of poverty. To tackle
poverty and economic disparity necessitates a comprehensive strategy, given that these issues arise from
an array of structural, political, and social influences. Studies indicate that a variety of elements contribute
to income inequality, such as disparities in education, the structure of labor markets, access to healthcare,
and governmental policies (World Economic Forum, 2022). Additionally, swift transformations in labor
markets driven by globalization and technological progress have favored skilled workers and capital
owners, while low-skilled workers find themselves at risk of job loss and stagnant wages. In recent times,
the reduction of poverty and the alleviation of inequality have become primary objectives for sustainable
development among policymakers and international organizations. The Sustainable Development Goals
(SDGs) established by the United Nations, especially Goal 1 (No Poverty) and Goal 10 (Reduced
Inequality), demonstrate the global acknowledgment of the necessity to tackle these dual challenges.
However, despite these initiatives, the advancement has been inconsistent, as numerous developing
nations continue to grapple with enduring obstacles like corruption, fragile institutions, and external
economic disturbances. The structural vulnerabilities in global economic systems have been further
Poverty and social inequality

underscored by the COVID-19 pandemic. According to the International Labour Organization (2021), 114
million jobs vanished in 2020, thrusting millions into poverty and exacerbating existing disparities. The
economic decline disproportionately impacted vulnerable populations, such as women, low-wage earners,
and individuals in developing nations, highlighting the persistent inequalities that afflict global
development.
The purpose of this article is to investigate the roots and effects of poverty and economic disparity,
utilizing a substantial range of academic research and empirical evidence. Additionally, it will analyze
possible policy measures, including progressive taxation, welfare initiatives, and educational reforms, that
may contribute to diminishing inequality and easing poverty. By grasping the intricate relationship
between these two issues, scholars and policymakers can formulate more effective approaches aimed at
fostering a fairer and more prosperous society.

Literature Review:

The connection of poverty to economic inequality has stimulated a wide range of literature, from various
scholars who point to different options on how these issues could be handled better. Narrowing in on the
emerging camps on this issue is the idea that economic growth is the means to achieve poverty lessening;
however, individuals at the top with resources, and who oppose equal opportunities, might destroy such a
development. This section highlights some often-cited works of literature that talk about these two
factors, some authors bringing out different dimensions of the relationship between poverty and
inequality.
A substantial amount of contribution is attributed to Ravallion (2014) in his claim that it is not enough
just to achieve an increase in economic growth to terminate poverty, but it is particularity important to
develop the growth in an 'inclusive' and 'equitable' way. He duly puts emphasis on the crucial role of a
growth, which brings about equal distribution of wealth benefits for the whole population with a special
regard to the lower income spectrum. While Ravallion's research reveals that in nations with high
juxtaposition of rich and poor, economic growth has very limited effectiveness in poverty alleviation, as
the wealthy tends to amass the generated wealth. In a similar fashion, this point is confirmed by the
juxtaposition analyses of the countries with the same rapid progress of their economics but greater
variance in patterns of inequality (Ravallion, 2014). The world economy has seen frequent development
over the past decades; however, for much of the population, poverty is still part of reality, and in some
parts of the world, the gap between the rich and poor seems to be widening. The World Bank (2023) states
that about 9.2% of the world's population has to live on an amount that corresponds to less than $2.15 per
day, which is the internationally recognized poverty threshold. While fortunes of few are multiplying, the
gap between the rich and the poor is updating considerably. Oxfam published in 2022 that a group of 10
wealthiest people in the world are twice as richer than when the COVID-19 pandemic has started with
more than 160 million people falling in poverty, which formerly were in the middle class (Oxfam, 2022).
What one can see in these statistics is the paradox that is happening in our generation: as the global wealth
keeps on increasing, so the gap between the poor and the rich grows as well. Globalization has been the
topic of much of the research, as it is believed to be a major factor shaping the income disparity. Stiglitz
(2012) informs us that globalization could often widen the gulf between the rich and the poor by
concentrating wealth among the few while making things more difficult for the less developed parts of the
world to cope with poverty. Such entities have then benefitted disproportionately from international
operations, including trading and financial affairs, while developing workers have faced near-stagnant
Poverty and social inequality

remuneration and poor advancement prospects. This has led to an acceleration in the structure of
economic inequality, even within those countries that have enormously improved their overall GDP per
capita. Stiglitz's viewpoints on the downsides of the neoliberal economic mode are in line with the
thoughts of the supporters who believe that new global relationships could enhance the unfair differences
that exist (Stiglitz, 2012). A closely related area studies how government strategies can act as an effective
solution to this problem, that is, how government policies can alleviate poverty and inefficiency. A central
tenet of Atkinson (2015) describes progressive taxation and reform of the welfare as indispensable tools
for combating such issues. He believes that the process of wealth redistribution via the tax system and
establishment of public services, for instance, education and healthcare, will lead to great elimination of
poverty and inequality. Atkinson’s works look at the example of Nordic countries, which not just
implemented the solutions but also achieved lower poverty and inequality rates when compared to
developed countries (Atkinson, 2015). The study of the link between education and economic inequality
is amongst the very important dimensions of social research. Hanushek and Woessmann (2015) explain
that an inherent cause of economic inequality is the unequal access to education such that people with
fewer educational opportunities are mainly stuck in the low-wage occupations with very little room for
mobility. They shed light on the urgency of ensuring access that is broad and fair to decent quality
education so that more people can initiate social mobility and subdue the prevailing inequality. Their
findings are in line with research by other academicians who contend that nations with immense
disparities in educational provision are often faced with comparable differences in economic provision
(Hanushek & Woessmann, 2015). In a groundbreaking book The Spirit Level, Wilkinson and Pickett
(2010) argue that extreme income inequality have negative consequences on public decency and cause
social problems such as reduced trust in people's conduct, more crime, and weaker health among the
society at large. Their conclusions prove that more equal societies enjoy improved human relations and
better health generally, with total wealth not being a determining factor. Similar to their contribution that
generated wide-ranging discussions, Wilkinson and Pickett’s work is often cited as evidence that unequal
access to resources directly impacts societal success (Wilkinson & Pickett, 2010).
Through his book, Capital in the Twenty-First Century, Piketty (2014) introduced his research findings of
wealth accumulation and income distribution in the modern economy to the public. He attributes the
inequality experienced in the past to the divergence between capital and growth rates, therefore
historically a small elite has always owned the bulk of capital assets. He, therefore, recommends the
development of mechanisms of international cooperation in the creation of progressive taxation policies
that help in controlling the rising concentration of wealth and its negative consequences to the democratic
structures. The crowd-pleasing effect of his research was palpable via empirical data on historical
inequality trends and several notable scholarly solutions which were helpful in addressing the same
(Piketty, 2014).

Method and Findings:

This research follows the Systematic Literature Review (SLR) approach, an established method to
critically assess and summarize existing literature on a given topic systematically. The primary objective
of this SLR is to examine scholarly contributions regarding the intersection of poverty and economic
inequality. The review aims to identify major themes, policy recommendations, and the evolution of
research in this domain. A comprehensive search strategy was employed using relevant keywords such as
"poverty," "economic inequality," "income disparity," "poverty reduction," "globalization and inequality,"
Poverty and social inequality

"educational disparity," "government policies on poverty," and "wealth redistribution." Boolean operators
(AND/OR) were used to refine searches, ensuring the retrieval of articles focusing on both poverty and
inequality.

Findings:

The systematic literature review (SLR) disclosed a variety of significant discoveries on the relation
between poverty and economic inequality. The evaluation demonstrated that the poor will become poorer
and more deprived because of economic inequity, which is resulted by the inequality of access to basic
resources and chances, and thus, the cycle of poverty goes on. It is the higher-income countries that have
reduced poverty more slowly, as the rich have a tendency to aggregate the wealth, and this in turn limits
the economic growth benefits through trickling-down.
It was revealed that educational disparity is a major cause of people not being able to get quality
education and, thus, their social mobility is quite tenuous and thus poverty is still remaining. Not only that
but globalization and technological advancements have enormously favored the upper echelons of the
society and income inequality has been further exacerbated so it made it nearly impossible for low-skilled
workers to earn more money.
The policy measures primarily progressive taxation and welfare programs can be conservative and proper
instruments in reducing inequality and eliminating poverty, as shown by the achievements of some
successful Nordic countries. The COVID-19 outbreak has deepened economic crises and poverty
worldwide with the most vulnerable groups being the most hit by job losses and economic shrink. These
discoveries are the reasons for the requirement of universal and all encompassing policies that will
intervene in the interconnected problems of poverty and economic inequality.

Discussion:

Depicted by the systemic literature review, the intricate and interrelated condition of poverty and
economic inequality are greatly evident. The educational evidence provided means that although global
economic growth has been known to decrease the amount and percentage of poverty in the world, the
riches accruing from the economic growth are not evenly distributed and most often, the most vulnerable
communities do not get a fair share of the benefits arising from the economic progress. This discrepancy
is mainly connected to the high level of inequality in the economy, which relatively restrains the
potentials of growth to reduce poverty (Ravallion, 2014).
One of the significant arguments of the literature is that globalization is changing the structure of the
inequalities in the society. Stiglitz (2012) argues that in the situation of being uncontrolled by regulatory
standards, the global economy may be aligned to the interest of the capital and highly skilled workforce,
which leads to the further division of the social classes at various levels inside the nations and among
them. Furthermore, new technologies lead to a loss of low-skilled workers and jobs, which in turn keep
wages of low-income individuals stagnant, making the scenario even worse.
Educational inequalities disturb the process of achieving equilibrium in the society, socioeconomic-wise.
According to Hanushek and Wassermann (2015), only those who have similar access to quality education
have higher chances of ascending the social ladder, while poverty is perpetually seasoned by lack of
knowledge and low-quality education. The results are in accordance with the general view that education
Poverty and social inequality

is the main weapon to used to fight the inequalities in economic opportunity and, therefore, gaps in
educational opportunities are a major cause of the income inequalities.
It is government policy that comes out as one of the critical factors in tackling these challenges.
Progressive taxation, in combination with a well-fashioned social welfare system, implemented in
appropriate political contexts, has been shown to alleviate both inequality and poverty. Atkinson (2015)
and Piketty (2014) assert that countries like the Nordic states have the ability to bring about certain levels
of equality by the means of the welfare state and resting taxation on the right persons.
COVID-19 pandemic worsens the existing inequities, resulting in the report of the International Labour
Organization (2021) and Oxfam (2022). The severe impact on those with low incomes, women, and
excluded societies only underscores the critical role that socio-economic structures and systems play in
worsening inequality and poverty during global crises.
This subject has a high level of saturation, even though it is still not enough, since several gaps are still
present. The continuation of extreme poverty in the wake of rapid economic expansion is an
uncomfortable message that the models and the legislation may not be ready for the challenge. It remains
the major restraining factor, taking the forms of corruption, weak institutions, and policy inefficiencies,
and still preventing the fulfillment of development programs in the majority of the developing countries.

Policy Recommendations:

Implications for policymakers and stakeholders looking to curb poverty and economic disparity are
highlighted by the results of this study.
Inclusive Economic Policies: It is now a need for restorative policies that bring to the fore inclusive
wealth establishment, and the benefits of development should trickle down to all societal segments. This
would mean that interventions are directed to the potential sectors that have a capacity to absorb unskilled
people into working status and the implementation of wage law that is required for vulnerable workers.
Education Reforms: As successfully accessing quality education becomes a core issue, from here, the
following innovations are absolutely bound to take place. Among those, governments will be encouraged
to invest in educational infrastructure, and especially in underserved regions, and at the same time, they
should look at policies that should remove the barriers to education for the socially excluded groups and
individuals.
Progressive Taxation and Redistribution: By passing progressive tax systems, fairness in wealth
distribution could be improved. And then, the outcome of such policies can finance social services that
are all-inclusive where the poor people can get more benefits to improve their economic and social
conditions.
Regulating Globalization: There is an urgent need for international organizations globalization.
Formulation of codes that protect worker rights, ensure fair trade, and guard against tax evasion by
multinational companies becomes a critical preventive measure against the negative effects of
globalization.
Crisis Response Mechanisms: The better social protection mechanism will ensure that the agonies of the
poor in the economy, especially like pandemics, are mitigated. This is no exception in the case of
unemployment, which would be allayed by the help of emergency support, immediate health care
services, and state-funded wage protection plans.

Limitations of the Study:

Poverty and social inequality

Instead, while this SLR takes a holistic approach, it is restricted by the boundaries of this existing, mostly
of 2010 documents up to the present. The fact that the foreign-language texts were excluded entails a risk
of dropping important publications, even not only English-speaking regions. Another limitation of the
study could be the dependence on secondary data, which may miss on the latest developments and gaps
beyond 2023, especially as the world economy continues to change as new events are happening every
day.

Conclusion:

Although intertwined with the challenges of poverty and economic inequalities, there is no doubt that
both as they underscore the prevention of overall development and social cohesion. The analyzed
literature indicates that discrepancy reduction is needed in combination with financial gains to make sure
poverty is completely eliminated. This requires taking a sound approach with various components, which
include, for example, adopting inclusive economic policies, augmenting quality education opportunity,
imposing a more progressive taxation system, and enhancing social safety nets.

The current crisis of the increased issues by COVID-19 puts a vivid light on an urgent and long-term
action. Governmental representatives should prioritize strong programs to stimulate growing economics
and at the same time, they have to be taken care of by socially attracting the benefits to all social
segments, mostly to the most vulnerable.

Recommendations for Future Research:

Other than that, later research needs to concentrate on dedicated studies about cross-sectional surveys.
These surveys would look at policies in relation to the poor and their future possibilities. Finally, more
geographically precise trials that account for the context, indigenous modes of life and governing systems
on the ground need to be conducted. Furthermore, there is a need for an inquiry into the profound ways of
new or developing dangerous technologies and digital economies that will increase or decrease the
differences in wealth across the world.

References:

o Atkinson, A. B. (2015). Inequality: What can be done? Harvard University Press.

o Hanushek, E. A., & Woessmann, L. (2015). The knowledge capital of nations: Education
and the economics of growth. MIT Press.
o International Labour Organization. (2021). World Employment and Social Outlook:
Trends 2021.
o Oxfam. (2022). Inequality kills: The unparalleled rise of inequality in the wake of
COVID-19.
o Piketty, T. (2014). Capital in the twenty-first century. Harvard University Press.
Poverty and social inequality

o Ravallion, M. (2014). The economics of poverty: History, measurement, and policy.

Oxford University Press.
o Stiglitz, J. E. (2012). The price of inequality: How today’s divided society endangers our
future. W. W. Norton & Company.
o United Nations Development Programme. (2020). Human Development Report 2020.
o Wilkinson, R., & Pickett, K. (2010). The spirit level: Why equality is better for everyone.
Penguin Books.
o World Bank. (2023). Poverty and shared prosperity 2022: Correcting course.
o World Economic Forum. (2022). Global Risks Report 2022.