The poverty trap affects people living in households on low incomes.
- It creates a disincentive either to look for work or work longer hours because of the effects of the income tax and welfare benefits system.
- For example, a worker might be given the opportunity to earn an extra £60 a week by working ten additional hours. This boost to his/her gross income is reduced by an increase in income tax and national insurance contributions.
- The individual may lose some income-related welfare benefits and the combined effects of this might be to take away over 70% of a rise in income, leaving little in the way of extra net or disposable income.
- When one adds in the possible extra costs of more expensive transport charges and the costs of arranging childcare, then the disincentive to work may be quite strong.
Subscribe to email updates from tutor2u Economics
Join 1000s of fellow Economics teachers and students all getting the tutor2u Economics team's latest resources and support delivered fresh in their inbox every morning.
You can also follow @tutor2uEconomics on Twitter, subscribe to our YouTube channel, or join our popular Facebook Groups.
- Economics
- Study notes
- Poverty
- Relative poverty
- Poverty trap
- Poverty and inequality
- Multi-dimensional Poverty
- Low Pay
Geoff Riley
Geoff Riley FRSA has been teaching Economics for nearly thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.
Related Collections
Your Might Also Like
From the Blog
More Study notes
-
Essential A Level Economics in Year 2
This course is designed to support non-specialist, inexperienced or newly-qualified teachers of A Level Economics as they tackle the challenge of delivering the second year of linear A Level Economics.
-
WOW! ECONOMICS 2018/19
It's back! WOW! Economics 2018/19 features a brand new collection of teaching & learning resources, approaches and inspiration for ALL Economics teachers!
Popular Content
-
Macroeconomics Example Essays (Volume 1) for A Level EconomicsMacroeconomics Example Essays (Volume 1) for A Level Economics
- SKU: 02-4130-30006-03
-
Printed Edition
-
Student personal license
- £5.00
Added to your Shopping Cart!
Macroeconomics Example Essays (Volume 1) for A Level Economics
- SKU: 02-4130-30006-03
-
Printed Edition
- £5.00
-
Theory of the Firm Example Essays (Volume 1) for A Level EconomicsTheory of the Firm Example Essays (Volume 1) for A Level Economics
- SKU: 02-4130-30016-03
-
Printed Edition
-
Student personal license
- £5.00
Added to your Shopping Cart!
Theory of the Firm Example Essays (Volume 1) for A Level Economics
- SKU: 02-4130-30016-03
-
Printed Edition
- £5.00
Teaching Vacancies
-
Teacher & Lesson Developer (FT)
Winland Academy Ltd, London
-
Examiner - GCE A Level - Business Studies (2016 Specification)
Pearson, Home based
-
Economics Contributor
tutor2u, On-line
- Browse all jobs ›
Advertise your vacancies with tutor2u
Much cheaper & more effective than TES or the Guardian. Reach the audience you really want to apply for your teaching vacancy by posting directly to our website and related social media audiences.