Poverty Economics Research Paper Example | Topics and Well Written Essays - 1750 words

Poverty Economics - Research Paper Example The model of trickle-down effect of growth is found to be prevalent in practice in the real world. Under this model, the benefits of growth are mostly savored by the upper and middle classes of the society. The lower middle class and the grass root level receive very little benefits of this economic growth. This is due to the fact that there is serious problem of income inequality in most of the economies in the globe, particularly in the developing countries (Altmann et al., 2013). All the sectors in the developing economies are not equally developed and there is huge inequality in income in the countries. In the concerned article, the Chief economist of World Bank has mentioned that the Bank has placed two new objectives that it would strive to achieve. These two goals are â€Å"ending extreme and chronic poverty in the world by 2030, and promoting shared prosperity, defined in terms of progress of the poorest 40% of the population in each society† (Basu, 2013). ... factors that affect this growth rate are rapid technological development, improvement in productivity and the lowering in the number of people living below poverty across the world. During the 19th century and also in the first few decades of the 20th century, over 1.2 billion people in the world used to live below the poverty level (the poverty line is set at $1 per day). Currently, this percentage of population has fallen marginally. According to the theory of poverty line, the people living below poverty line have the purchasing power of less than $1 dollar per day. Additionally, it must be noted in this context that more than half of the population of the world lives below $2 dollars per day. The variables that measure poverty are under nutrition, poor health condition, poor level or absolutely no literacy, environmentally degraded and unhygienic living condition, low or no access to essential things in life (such as clean water) and lack of protection of fundamental freedoms or rights. Poor people all over the globe are characterized by the living condition in slum areas and under nourishment. Scholars and economists have univocally agreed that poverty is integrally linked with inequality in income distribution (Naranpanawa, Selvanathan & Bandara, 2013). One commonly used method of measuring the personal income statistics is the Lorenz curve. The Lorenz curve helps to analyze the percentage of income against the percentage of income recipients. The further the line is from the diagonal, the greater is the degree of inequality. The following diagram illustrates the workings of the Lorenz curve. Figure 1: Lorenz curve (Source: Anonymous, n.d.) The further the curve bends from the diagonal, the greater is the inequality in income level. The area between the two