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Poverty in the Uk

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Examine the state and extent of poverty in the UK

Absolute poverty measures the number of people living below a certain income threshold or the number of households unable to afford certain basic goods and services. Whereas,

Relative poverty measures the extent to which a household's financial resources falls below an average income threshold for the economy. Although living standards and real incomes have grown because of higher employment and sustained economic growth over recent years, the gains in income and wealth have been unevenly distributed across the population.

Poverty is caused by both a low real national income relative to a to a countries total population size and by inequalities in the distributions of income and wealth. The former leads to absolute poverty for most of a countries inhabitants, whereas the latter causes relative poverty. Discussions surrounding poverty in the United Kingdom tend to be of relative poverty rather than absolute poverty.

The poverty trap affects people on low incomes. It creates a disincentive to look for work or work longer hours because of the effects of the tax and benefits system. For example, a worker might be given the opportunity to earn an extra 50 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 also lose some income-related state benefits. 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.

Disparities in wages and earnings growth are one cause of poverty in the UK. Wages and earnings in some jobs have grown much faster than others. Workers in industries enjoying fast growth and high profits have benefited from above-average increases in pay and earnings. Examples include business services,

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