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Poverty and Inequality - Introduction

Welcome to the Social Issues lesson! When it comes to social issues in economics, poverty and inequality remain a topical issue, both in the developing and the developed world.
Income inequality and poverty are two heavily discussed issues in modern politics and economics, with there being a large income divide between Western and Eastern countries. This chapter seeks to consider the economics that ultimately affects poverty and income inequality across the globe, as well as delving into the symbiotic relationship between income inequality and poverty.
Two broad types of poverty can be observed. Relative poverty can be seen when the average income of a country is below a certain amount. Absolute poverty, on the other hand, is when income is below a level which would be deemed necessary to maintain a basic standard of living.


The chapter also investigates the different types of poverty that are observed and examines whether in some instances there is no hope for those who have been born into poverty.
It goes on to further highlight and discuss the Solow Growth model and the challenges that the unemployed face when they do not have access to basic training and education as a route to move away from situations of poverty.

Also discussed is the issue of sustainable development in relation to the environment, and the possible dichotomy of economic growth and environmental security.

This chapter thus offers an overview of this pressing global issue and helps us to understand the factors that lead to its origin and sustenance. This is a key topic to understand global economic systems and the pressures that face different nations.

Goals for this section

  • To understand the difference between poverty and income inequality.
  • To understand what factor sustainable growth plays in the reduction of poverty.
  • To appreciate the issues surrounding growth and environmental sustainability.


The objectives of this module are:

  • To be able to distinguish between income inequality and poverty.
  • To understand the Solow Growth model with examples.
  • To understand the Coase Theorem.
  • To be able to explain how labour market interventions might have an effect on income inequality and poverty.

Begin the Lecture