poverty trap
poverty trap
| Noun | 1. | poverty trap - a situation in which an increase in income results in a loss of benefits so that you are no better off |
| 单词 | poverty trap | |||
| 释义 | poverty trappoverty trap
poverty trappoverty trapthe situation where a slight increase in earnings leads to an individual orfamily being worse off overall as a consequence of losing entitlement to other benefits. People on low incomes may be eligible not only for social security support but may also make lower income tax and National Insurance (NI) contributions. A slight increase in their earnings may lead to the loss of their social security entitlement and put them in a position where they have to pay higher income tax and NI contributions; the slight increase in earnings may be considerably less than the extra amount they have to pay in NI and income tax contributions and their loss of social security support. The existence of a poverty trap is seen to be inevitable where there is a system of means-tested social security benefits. A similar situation exists where single mothers may be considered to be in a poverty trap in so far as a woman in a reasonably well-paid job may have that income jeopardized by the need to pay for childcare. By taking a part-time job or giving up paid work altogether she may be able to look after her child or children, but is likely to lose any occupational benefits, including a pension, as well as her career prospects. poverty trapPoverty Trappoverty trapa situation where an unemployed person receiving SOCIAL SECURITY BENEFITS is not encouraged to seek work because his or her aftertax earnings potential in work is less than the benefits currently obtained by not working. Given that social security benefits represent the ‘bottom line’ (that is, the provision of some socially and politically ‘acceptable’ minimum standard of living), the problem is how to reconcile this with the ‘work ethic’. One suggested way is for government to provide employers with employment subsidies that allow them to pay wages higher than the minimum level of social security, even though the MARGINAL REVENUE PRODUCT ofthe work undertaken does not warrant it. It will thus be to people's economic advantage to obtain employment, and in so doing it is hoped they will acquire work experience and skills that will improve their long-run earnings potential.Alternatively, the overlap between entitlement to social security benefits (based on one set of income scales) and the threshold level of income at which people start to pay tax (based on a different set of income scales) can be removed by the introduction of a NEGATIVE INCOME TAX. A negative income tax system replaces means-tested social security benefits on the one hand, and PROGRESSIVE TAXES on the other, with a single unitary tax system. Under this unitary tax system, people pay taxes when they are in employment and earning more than a stipulated minimum income and receive a tax rebate to bring their income up to the stipulated minimum level when they are either unemployed or earning less than the minimum. See alsoSUPPLY-SIDE ECONOMICS. poverty trap
Words related to poverty trap
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