• November 2, 2023

Addressing the Causes and Consequences of Poverty: Policy Responses

Policy Responses to Poverty

Poverty reduction policies aim to address both the causes and consequences of poverty. For example, a country’s economic growth can have different effects on poverty if the growth is focused on sectors that benefit poor people or if it’s driven by macroeconomic policies.

Public supports like rental assistance and energy assistance can help low-income families afford housing. Increasing the accessibility and affordability of high-quality child care is another important policy response to poverty.

Employment

A major problem with poverty is that it deprives individuals and families of a sustainable source of income. Poverty can also limit access to basic services such as clean water, healthcare and education, which in turn restricts opportunities for economic growth and employment. In addition, poverty can be trapped in a cycle where people are unable to break free from a situation of chronic deprivation.

Collective poverty occurs in disadvantaged demographic groups such as city ghettos and rural areas bypassed by industry. Such populations have higher mortality rates, lower levels of education, and poor health compared to more affluent segments of society.

Providing jobs that provide both income and empowerment is essential for poverty reduction. This includes promoting industrial development in these areas, boosting labour-intensive activities such as agriculture and upgrading job quality in the informal economy. There is strong evidence that reducing poverty through employment creates lasting benefits, including improving children’s health and educational performance and increasing family earnings and economic security.

Housing

Housing is a major concern for many low-income families. Whether they rent in the private market where housing prices often exceed household incomes, or live in subsidized public housing units for which building owners receive government payments to reduce tenants’ rents, low-income households face high housing costs that can cause them to struggle to afford other essential goods and services.

Many research findings support the idea that increasing access to affordable housing is an effective anti-poverty strategy. For example, Stanford economist Raj Chetty and his colleagues have found that children who moved to lower poverty neighborhoods as young children experience better economic outcomes as adults.

But, a large number of households needing rental assistance—including those paying excessive portions of their income for housing or living in substandard or overcrowded conditions—do not receive it due to funding limitations. Expanding voucher availability and helping assisted households move to higher opportunity neighborhoods would significantly reduce poverty. More people would not have to choose between paying their rent and buying needed medicine or food, and more children would grow up in stable homes in healthy communities with strong schools.

Health

In addition to the economy, a comprehensive poverty reduction strategy must include policies that improve health, increase family incomes, and strengthen housing and economic security. This is because even when the economy is healthy, families can face hardship if they earn too little or are hit with costly unexpected expenses.

For example, many families pay more than half of their incomes for housing and must struggle to make ends meet when the cost of heating or electricity spikes. These financial challenges can cause them to forgo needed health care or get into debt, especially if their children suffer from illness or disability.

Stronger policy interventions have cut poverty and reduced the large gaps between racial groups in opportunity and financial security, but lasting progress requires stronger action. Policies can help by creating a child allowance, increasing SNAP benefits, and expanding housing vouchers. They can also address barriers that prevent low-income households from accessing economic support and health coverage, including the five-year bar that blocks many immigrants with lawful immigration status from using federal means-tested programs like TANF, SNAP, and Medicaid.

Education

There is no strict definition of poverty, but everyone agrees that lack of education is a huge barrier to opportunity. People with education are more likely to get better jobs, which leads to higher pay that leads to more spending on goods and services that benefit the economy. Providing children with the chance to learn is vital to breaking this cycle of poverty and disadvantage.

Multiple studies demonstrate that policies like the EITC, which provides a large earnings subsidy that phases out as income rises, are effective at increasing work among low-income families and reduce poverty. Other policies that make it easier for workers to obtain employment and to cover family needs, such as quality child care, prekindergarten, and paid parental leave, also have substantial, lasting benefits. shoring up these programs would reduce near-term hardship and promote economic security for all and increase opportunities for future generations. Policymakers should remove barriers to such measures, including eliminating the five-year bar that prevents millions of lawfully-residing immigrants from accessing many means-tested supports and services.

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