The Issue of Poverty and Income Inequality


Rising income disparity has ignited a burst of investigation and replication on the roots and consequences of these tendencies. Several critics have stated that inequality does not merit all of its attention, saying that concentrating on inequality can shift the focus away from the primary problem of poverty. On the other hand, poverty and inequality are inexorably intertwined. There are significant limitations to addressing poverty or, more broadly, financial well-being-without, also considering income disparity as an analytical problem and a national issue. Indeed, it is debatable whether poverty can be defined independently of the income distribution. The government could solve the poverty and income inequality problem by raising the minimum income, extending the received income tax, developing assets for working people, and financing education that could make people innovative.

Background Information

Poverty and inequality are two separate but linked ideas but being poor refers to a person’s lack of resources to operate at a socially appropriate standard. To assess national poverty levels, the percentage of the population with income below a benchmark thought to reflect the bare minimum required for a person to flourish is used. For many years, the World Bank has used a one-dollar-per-day income baseline to gauge global poverty levels (Bergstrom, 2022). Despite significant variances in living costs between states and cities, the basic requirements have been adjusted for inflation and are applied uniformly across the country.

One sort of inequality is not adequately reflected by income and wealth discrepancies. One of the Millennium Development Goals set by the United Nations was to censor the incidence of extreme poverty in emerging economies by half by 2015, in association to previous years, when it was almost average (Wilson, 2017). By 2008, the nations met this objective, and the severe poverty rate had dropped to 12.6 percent in 2013 (Wilson, 2017). While these financial indicators have no inherent value, they seem positively associated with fundamentally valued traits like excellent health, lifespan, education, and overall satisfaction and happiness. On the other extreme, it is undeniable that those with increased wages have improved health, more education, and a more vital ability to engage in their communities’ social and political life. While money cannot buy everything, income distribution can be used as a surrogate for allocating a variety of desirable items.

Why Poverty and Income Inequality is a Societal Problem

Poverty and rising inequality are the two main social issues that affect society today. Being poor, for example, can lead to feelings of inadequacy, and internal embarrassment can lead to despair or suicide. There are essentially two major approaches that can be used to argue that income disparity is a significant problem in and of itself, regardless of its relationship to poverty. Gradational conceptions of class and structural concepts of class are the two approaches (Nakamura, 2020). People may claim that economic disparity is intrinsically unjust since it breaches established distributive justice rules (Al Attar, 2021). Many countries facing income inequality have less social advancement, trust, and educational achievement, more exceeding rates of teen births, incarceration, infant mortality, and homicide (Henriksson & Olsson, 2020). Greater equality is perceived as having inherent worth in the first situation, but it is seen as possessing instrumental value in the second.

Proposed Solutions to the Problem

In analyzing the frequency and endurance of poverty across time, many sociologists have emphasized on the relative relevance of social structures, agencies, or organizations. In the social and political realms, accusing some individuals for their difficulties has a long history. The emphasis has been on the apparently undeserving poor, individual action, claimed ineptness, or moral defects as important drivers of poverty in many stories, particularly significant political ones, and some scholarly research.

Rather than providing food, money, or building structures, World Neighbors views poverty as an average difficulty and focuses on teaching and empowering communities to discover long-term ways to solve their problems, such as hunger, poverty, and disease. Their programs help improve the social, economic, and physical resources that a community has access to and control. This access makes these programs extremely efficient and results in long-term improvement rather than a quick fix.

Other populations argue that redistribution of wealth via higher taxation and the effective income transfer to all citizens are indirect strategies to lessen income disparity. Debt relief and trade pact reforms that benefit each country’s poorest citizens can assist in minimizing global income gaps and other types of inequality, avoiding a race to the bottom (Stark et al., 2017). Implicitly, the administration can close the income gap by lowering the wealthy’s income while boosting the poor’s. Increasing employment or incomes and redistributing income are two strategies that focus on the latter.

Among the employment-associated initiatives are the firming of union rights, complete employment systems, living income plans, and pay subsidizations. Direct revenue allocation strategies include traditional ways tested and limited cash safety transfers. Microfinance is an overall strategy for poverty alleviation that tries to lift the underprivileged out of poverty. It is presently engaged in several emerging nations, Asia, and Latin America, growing rapidly and widely over the last few years (Sidek, 2021). According to many academics and policymakers, microfinance empowers the poor in developing countries, particularly women, by supporting income-generating activities, fostering entrepreneurship, and mitigating the risk.

On a worldwide scale, various revenue-generating options might be used by authorities to pay direct revenue transfers and other methods of growth backing to support people out of poverty and disparity. Such initiatives will be severe for moral value, public safety, and worldwide survival due to global uncertainty and environmental degradation linked to wealth and other economic imbalances (Singh & Chudasama, 2020). The government can fund education by providing student aid, a type of financial aid aimed to assist students in paying for their education. Government subsidies cut or eliminate tuition, lodging, board, and other expenditures in many countries, and students in other nations receive allowances for additional expenses (Dickson et al., 2017). Even in countries where tuition fees are high, such as the United Kingdom, a scholarship program backed by both governments and institutions effectively covers most students’ costs.

Interpretation of Statistical Data

Data from “Evaluating Poverty Alleviation Strategies in a Developing Country” Article

In assessing how successful growth is at decreasing the wealth gap, the initial degree of wage inequality is crucial. In countries with low economic disparity, a 1% increase in income could translate to a 4.3% reduction in poverty levels (Singh & Chudasama, 2020). According to participants involved in this study, creating high-quality dedicated support mechanisms at several stages is critical for poverty alleviation (Singh & Chudasama, 2020). Professionally qualified and committed human resources should staff the support structures. These support mechanisms play a crucial role in establishing and nurturing solid impoverished institutions on numerous levels, but they fade away when community heroes take charge of the program. The effectiveness of a poverty alleviation program depends on the formation and sustenance of self-reliant poor organizations at several stages, such as self-help organizations and cluster-level federations (Singh & Chudasama, 2020). Advanced CBOs, on the other extreme, are essential in ensuring that primary-level establishments maintain their quality and profitability.

Data from “Consensus Income Distribution” Article

In most locations, the approach to poverty measurement varies depending on the percentage of the disadvantaged population. According to Stark’s information from 2009 family income tax forms, the wealthiest percentage of families had an ordinary pre-tax income of $1,219,700 per year and remunerated a personal income tax proportion of 28.9 percent (Stark et al., 2017). The operational tax rate was substantially lower, as measured by total income tax paid relative to total income. Because of measures like the tax credit, the wealthiest 1 percent of homeowners funded an operative tax rate of 20.4 percent, whereas the poorest dual quintiles entirely incurred consequently lower income taxes (Stark et al., 2017). There are specific incidents of high-income people paying very little in taxes periodically reported in the news. The usual outline of the Congressional Budget Office is that those with greater earnings pay a more significant ordinary proportion of revenue in centralized revenue taxes (Basrowi, 2020). As a foundation for diagnosing poverty and the growth condition, most low-income countries adopt poverty eradication strategies and economic and department management frameworks.

Data from “Does Government Expenditure Reduce Income Inequality: Evidence from Developing and Developed Countries?” Article

Household disposable income distribution differs significantly among countries. In Sidek’s work, by the late 2000s, Organization for Economic Cooperation and Development (OECD) wide, income disparity after taxes and other deductions was roughly 25% lower than inequality in pre-tax income and transfers (Sidek, 2021). This information on OECD was as assessed by the Gini coefficient, while poverty estimated after-tax income was 55 percent lower than poverty measured before taxes and other deductions. Indeed, the Gini index varied from underneath 0.25 in Slovenia to 0.5 in Chile, even after taxes and transfers (Sidek, 2021). Percentile ratios are an intuitive approach to judge the breadth of the distribution of income and provide an indicator of income inequality at specific locations of the income distribution.

Good measurement properties do not necessitate any form of correction and vice versa. Reliability is an absolute scientific term used to evaluate and reflect on the intrinsic faults in any measurement technique. Validity refers to how well a group of markers measures the idea they are supposed to measure, which is poverty, and it comes in a variety of shapes and sizes. In this case, criterion validity was used since a set of factors in a scale were connected with a priori recognized results and causes of poverty, such as poor health, low income, and debt. Consumer pricing indexes (CPIs) figured prominently in determining global poverty trends and CPI bias aroused. Since national CPIs are used to interpret nominal expenditure figures from household survey data and the foundation year of the international poverty line, global poverty assesses individuals rely on them.

Strengths and Weakness

Alternative explanations and opinions for the different scholars’ stances were identified and examined. This explanation makes evaluating the veracity of a paper’s assertions easier. It also confirms the legitimacy of research by relying on the specialist knowledge of other experts in the field, avoiding the acceptance of fabricated work. Researchers can use the helpful input to update and improve their publications. Different variables indicate inequality, poor quality of life, or a lack of opportunity in other places. It is nearly impossible to develop a single concept of poverty than nations can use for all programs in a given region. The necessity for comprehensive and adaptable definitions is exemplified by the disparities between rural and urban impoverishment in Latin America. Rising poverty in the region’s massive cities creates issues peculiar to their setting, necessitating a completely new system for classifying and recognizing the poor. Any claim that urban poverty is a little less severe due to the availability of public services is untrue. Increased proximity rarely improves access for the disadvantaged, and city problems are more complicated than ever.

The positive ethical outcome is that individuals learn ways they could help the government fight poverty and income disparities. The negative moral effect is that the wealthy could feel disrespected due to the substantial tax differences. An ethical issue like discrimination or harassment is possible to arise. Fair employment practices in society are mandated by law for businesses. Organizations must recruit a diverse staff, establish norms and standards that encourage an equitable program, and foster an environment that values people from all walks of life. Unethical leadership is another concern, as confident organizational leaders’ actions, such as levying high taxes on the wealthy, appear to be illegal and violate moral standards.


The government could solve the poverty and income inequality problem by raising the minimum income, extending the received income tax, developing assets for working people, and financing education that could make people innovative. Although different organizations have been founded to provide practical solutions, no one has been able to free the world from poverty completely. When people look at statistics on poverty, the most typical finding is that poverty is more widespread in emerging countries. Another alternative is boosting the entire organizations working to lessen poverty by training people in wealthy countries on how to organize and take measures in this part. Giving unique prizes and praising them in several ways could be an excellent way to inspire persons who have interned to provide services. Water, nutritional foods, and living spaces for underprivileged people participating in charity projects to improve their lives are examples of these facilities.


Al Attar, M. (2021). Emerging powers, global justice, and international economic law: Reformers of an unjust order? Journal of International Economic Law, 24(3), 672-678. Web.

Basrowi, B. (2020). The effect of tax supervision and tax collection on obedience to pay taxes and tax revenue. Indonesian Journal of Accounting and Governance, 3(1), 101-140. Web.

Bergstrom, K. (2022). The role of income inequality for poverty reduction. The World Bank Economic Review. Web.

Dickson, L., Gindling, T., & Kitchin, J. (2017). The education and employment effects of DACA, In-State tuition, and financial aid for undocumented immigrants. SSRN Electronic Journal, 1-34. Web.

Henriksson, G., & Olsson, G. (2020). Health inequality monitoring – measuring what and how exactly? European Journal of Public Health, 30(5), 477. Web.

Nakamura, Y. (2020). Poverty alleviation and correction of income disparity through fiscal spending on education. Poverty & Public Policy, 12(1), 63-72. Web.

Sidek, N. (2021). Does government expenditure reduce income inequality: Evidence from developing and developed countries? Studies in Economics and Finance, 38(2), 447-503. Web.

Singh, P., & Chudasama, H. (2020). Evaluating poverty alleviation strategies in a developing country. PLOS ONE, 15(1), e0227176. Web.

Stark, O., Falniowski, F., & Jakubek, M. (2017). Consensus income distribution. Review of Income and Wealth, 63(4), 899-911. Web.

Wilson, D. (2017). World Bank. Impact, 2017(9), 80-81. Web.

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Premium Papers. "The Issue of Poverty and Income Inequality." March 7, 2023.