Module 4 - POVERTY, INEQUALITIES AND economic growth has been a major factor in

DEVELOPMENT reducing the levels of poverty which were seen

in pre-war Britain and the US. However, it is
Poverty is a state or condition in which a person or not necessarily the case that income and
community lacks the financial resources and essentials wealth will trickle down to the poorest. There is
for a minimum standard of living. a concern that economic growth could widen
Poverty means that the income level from relative poverty because it benefits the highly
employment is so low that basic human needs can't be skilled and wealthy classes more than those at
met the bottom,
● Scale and Magnitude of Poverty 2. Reduce Unemployment
Absolute' poverty is “insufficiency in Unemployment is a major cause of
basic necessities of existence”. In practical poverty because the unemployed have little
terms, this usually means “being without income, relying on state benefits.
adequate food, clothing or shelter”. The notion Unemployment can be reduced through both
of 'poverty line' describes poverty in supply-side policies, such as free training
subsistence terms, i.e., the 'minimal' schemes for those who are structurally
necessary for the maintenance of physical unemployed.
health. Poverty and unemployment are often
● Measuring Poverty and Inequality geographical problems, with depressed areas
Poverty is measured in the United seeing higher levels of poverty. Policies to
States by comparing a person's or family's overcome geographical poverty could include
income to a set poverty threshold or minimum government subsidies for firms to set up in
amount of income needed to cover basic depressed areas. Also building better
needs. People whose income falls under their infrastructure (transport and communication) in
threshold are considered poor. depressed areas can provide an economic
stimulus to create new jobs.
Poverty can be and is measured in 3. Progressive Taxes
different ways by governments, international Increasing progressive taxes, such as the
organisations, policy makers and practitioners. higher rate of income tax from 40% to 50%, will take
Increasingly, poverty is understood as more income from those on high-income levels. This
multidimensional, comprising social, natural enables cuts in regressive taxes (e.g. VAT/Sales tax)
and economic factors situated within wider and increased welfare benefits which help increase the
socio-political processes. The capabilities income of the poor. This can be an effective way to
approach also argues that capturing the reduce relative poverty.
perceptions of poor people is fundamental in ● However, critics argue higher income taxes
understanding and measuring poverty create a disincentive to work., leading to less
output. This is because higher tax makes work
To reduce poverty, government policies could include: less attractive and reduces the opportunity
1. Sustained economic growth cost of leisure. Therefore people work less and
The argument is that promoting enjoy more leisure. This is known as the
economic growth increases total income in substitution effect. Similarly higher corporation
society, creating more jobs and income which tax may discourage investment in the UK
could be redistributed. In the past 100 years,
 ● However, this is disputed by other economists, working extra hours or getting a higher
who point out that higher tax reduces incomes paid job because any extra income
and this may encourage people to work more, they earn will be taken away in lost
to maintain their income. (This is known as the benefits and higher taxes. To avoid
income effect) the poverty trap the government can
● Evidence suggests that higher income tax has grade benefits so that there isn’t an
little incentive on the supply of labour, immediate cut off point.
suggesting labour supply is relatively inelastic. ● Some relatively poor may fall just
However, it also depends at what level income outside the qualifying limit.
tax is set. There is certainly a level where ● Also, not everyone entitled to means-
higher income tax will reduce incentives to tested benefit will collect them
work. because of ignorance or difficulties in
● Other problems with increasing income tax, applying.
include tax evasion and the fact firms may The government used to prefer universal
adjust wages to compensate for the higher benefits because it avoided the above problem, and
taxes. people feel if they contribute towards taxes they
4. Increasing benefits to the poor deserve their benefits regardless of their wealth.
Means-tested benefits involve
increasing welfare benefits to those on low However, in recent years, the welfare state
incomes. For example, universal tax credit, has faced increased demands due to demographic
food stamps or child benefit. factors leading to more calls for means-tested benefits.
5. National Minimum Wage
Advantages of means-tested benefits: The government could increase the national
1. They allow money to be targeted to minimum wage. This is an effective way of increasing
those who need it most. e.g family tax the incomes of the low paid and therefore reducing
credit or pension credit. wage inequality. A related concept is the Voluntary
2. It is cheaper than universal benefits Living Wage – an attempt to encourage firms to pay
and reduces the burden on the higher wages.
taxpayer.
However, the problem with using benefits to ● In recent years, minimum wages have become
reduce poverty include: more important in tackling in-paid work in both
the UK and US.
● Means-tested benefits are often ●
unpopular because people are ● In the UK, the number of workers benefitting
stigmatised as being poor. from the minimum wage has increased from
● Also, it may create a disincentive to 830,000 in 1999 to 2 million in 2018.
earn a higher wage because if you do ● In the US, there is a proposal to increase the
get a higher paid job you will lose at federal minimum wage to $15 by 2024 – a
least some of your benefits and pay move that could see 33.5 million U.S. workers
more tax. This is known as “the and 6.2 million workers in poverty see a rise in
benefits trap” or the “poverty trap”. the minimum wage.
The poverty trap occurs where people ● A potential problem of increasing the minimum
on low incomes are discouraged from wage is that it may cause unemployment
 because firms may not be able to afford the Absolute vs. Relative Poverty
workers. If it does cause unemployment,
poverty could worsen. However, if firms have When measured, poverty may
monopsony power, then they will be able to be absolute or relative. Absolute poverty refers to a set
afford higher wages. Empirical evidence standard which is consistent over time and between
suggests that we can increase minimum countries. An example of an absolute measurement
wages fairly significantly before the cost of would be the percentage of the population eating less
falling employment and higher prices outweigh food than is required to sustain the human body
the benefit of rising wages and higher (approximately 2000–2500 calories per day).
productivity. See more on raising the minimum Relative poverty, in contrast, views poverty as
wage socially defined and dependent on social context. One
6. Benefits in kind. relative measurement would be to compare the total
These are important public services which are wealth of the poorest one-third of the population with
provided free at the point of use (or subsidised). They the total wealth of the richest 1% of the population. In
mainly involve education and health care. Free this case, the number of people counted as poor could
education enables those from low-income families to increase while their income rises. There are several
gain skills and qualifications which can help lead to different income inequality metrics; one example is
better jobs and higher incomes in the future. the Gini coefficient.
7. Universal basic income (UBI)
Although absolute poverty is more common in
A universal basic income or citizen’s income
developing countries, poverty and inequality exist
involves giving every citizen a weekly benefit –
across the world.
regardless of circumstances and income. The idea is
to ensure everyone has a minimum income guarantee, Both absolute and relative poverty measures
but without any disincentives of losing means-tested are usually based on a person's yearly income and
benefits from working more. See more at Universal frequently take no account of total wealth. Some
basic income (UBI) people argue that this ignores a key component of
economic well-being. Major developments and
Policies to reduce poverty in developing economies research in this area suggest that standard one
To reduce poverty in developing economies, dimensional measures of poverty, based mainly on
the focus may be on different policies. wealth or calorie consumption, are seriously deficient.
This is because poverty often involves being deprived
● Education – greater spending on education on several fronts, which do not necessarily correlate
and training can enable a higher-skilled well with wealth. Access to basic needs is an example
workforce. of a measurement that does not include wealth.
● Foreign Aid – aid from developed countries Accesses to basic needs that may be used in the
can be used to invest in better health care and measurement of poverty are clean water, food, shelter,
education. However, some argue aid can and clothing. It has been established that people may
encourage dependency. have enough income to satisfy basic needs, but not
● Diversification of the economy away from use it wisely. Similarly, extremely poor people may not
agriculture to manufacturing. This enables be deprived if sufficiently strong social networks, or
greater economic development but may be social service systems exist.
difficult to do without the right skills and
infrastructure.
 MODULE 5- HUMAN POPULATION AND
ECONOMIC DEVELOPMENT

Population is defined as all the inhabitants of

a particular town, area, or country. While population
growth rate is the average annual rate of change of
population size during a specified period. What is
Globalisation and Poverty
the significance of population in the achievement of
In simple terms, globalization is the process economic growth? Is the human population really
by which people and goods move easily across detrimental to economic growth? Below we will look at
borders. Principally, it's an economic concept – the four theories about population that inform sociological
integration of markets, trade and investments with few thought: Malthusian, zero population growth,
barriers to slow the flow of products and services cornucopian and demographic transition theories.
between nations.
Theories on Population

1. Malthusian Theory of Population

Economic growth is the main channel through
which globalization can affect poverty. What 2. Zero Population Growth

researchers have found is that, in general, when 3. Cornucopian Theory

countries open up to trade, they tend to grow faster 4. Demographic Transition
and living standards tend to increase. The usual Malthusian Theory
argument goes that the benefits of this higher growth
Thomas Malthus was an 18th-century British
trickle down to the poor.
philosopher and economist noted for
the Malthusian growth model, an exponential
We investigated four factors typically cited as
formula used to project population growth.
causing changes in household in- come inequality:
The theory states that food production will not be able
namely, (1) the rising proportion of urban households,
to keep up with growth in the human population,
(2) age distribution changes, (3) increasing number of
resulting in disease, famine, war, and calamity.
highly educated households, and (4) wage
rate inequality. (1) Rising proportion of urban
households.

U.S. Inequality that Everyone Should Know

● Wage Inequality

● Homelessness

● Occupational Sex Segregation

Zero Population Growth Theory

● Racial Gaps in Education This theory refers to a population that is unchanging –

it is neither growing, nor declining; the growth rate
● Racial Discrimination
is zero. This demographic balance could occur when
● Child Poverty the birth rate and death rate are equal. Zero
population growth, sometimes
● Residential Segregation
abbreviated ZPG (also called the replacement level of
● Health Insurance and many more. fertility), is a condition of demographic balance where
the number of people in a specified population and their philosophic opponents—Malthus and his
neither grows nor declines, considered as a social aim school—are called "doomsters" or "doomers.”
by some. According to some, zero population growth, Demographic Transition Theory of Economic
perhaps after stabilizing at some optimum population, Growth
is the ideal towards which countries and the whole
In demography, demographic transition is a
world should aspire in the interests of accomplishing
phenomenon and theory which refers to the historical
long-term environmental sustainability. What it means
shift from high birth rates and high infant death rates in
by the number of people neither grows nor declines' is
societies with minimal technology, education
that births plus in-migrants equal deaths plus out-
(especially of women) and economic development, to
migrants.
low birth rates and low death rates in societies with
Cornucopian theory of population growth advanced technology, education and economic
Cornucopian hold an anthropocentric view of the development, as well as the stages between these two
environment and reject the ideas that population- scenarios. Although this shift has occurred in
growth projections are problematic and that Earth has many industrialized countries, the theory and model
finite resources and carrying capacity (the number of are frequently imprecise when applied to individual
individuals an environment can support without countries due to specific social, political and economic
detrimental impacts). factors affecting particular populations.

"When civilization [population] increases, the available However, the existence of some kind of demographic
labor again increases. In turn, luxury again increases transition is widely accepted in the social sciences
in correspondence with the increasing profit, and the because of the well-established
customs and needs of luxury increase. Crafts are historical correlation linking dropping fertility to social
created to obtain luxury products. The value realized and economic development. Scholars debate
from them increases, and, as a result, profits are again whether industrialization and higher incomes lead
multiplied in them. Production there is thriving even to lower population, or whether lower populations lead
more than before. And so it goes with the second and to industrialization and higher incomes. Scholars also
third increase. All the additional labor serves luxury debate to what extent various proposed and
and wealth, in contrast to the original labor that served sometimes inter-related factors such as higher per
the necessity of life." capita income, lower mortality, old-age security, and

A cornucopian is a futurist who believes that rise of demand for human capital are involved.

continued progress and provision of material items for

mankind can be met by similarly continued advances
in technology. Fundamentally they believe that there is
enough matter and energy on the Earth to provide for
the population of the world.

Looking further into the future, they posit that the

abundance of matter and energy in space would
First Stage:
appear to give humanity almost unlimited room for
growth.The term comes from the cornucopia, the "horn In this stage, the country is backward and is

of plenty" of Greek mythology, which magically characterized by high birth and death rates with the

supplied its owners with endless food and drink. result that the growth rate of the population is low.

Cornucopians are sometimes known as "boomsters", People mostly live in rural areas and their main
occupation is agriculture which is in a state of
backwardness. There are a few simple, light and small facilities are expanded. Modern drugs are used by the
consumer goods industries. The tertiary sector people. All these factors bring down the death rate. But
consisting of transport, commerce, banking and the birth rate is almost stable. People do not have any
insurance is underdeveloped. All these factors are inclination to reduce the birth of children because with
responsible for low incomes and poverty of the economic growth employment opportunities increase
masses. Large family is regarded as a necessity to and children are able to add more to the family
augment the low family income. Children are an asset income. With improvements in the standard of living
to society and parents. There being mass illiteracy, the and the dietary habits of the people, the life
society is not expected to educate them and thus expectancy also increases. People do not make any
burden itself. The existence of the joint family system efforts to control the size of family because of the
provides employment to all children in keeping with presence of religious dogmas and social taboos
their ages. Thus a child becomes an earning member towards family planning. Of all the factors in economic
even at the age 5 when he becomes a helping hand to growth, it is difficult to break with the past social
his parents in domestic affairs. More children in a institutions, customs and beliefs. As a result of these
family are also regarded as an insurance against old factors, the birth rate remains at the previous high
age by the parents. People being illiterate, ignorant, level.
and superstitious and fatalist are averse to any Third Stage:
methods of birth control. Children are regarded as
In this stage, the fertility rate declines and tends to
God-given and preordained. Being childless is
equal the death rate so that the growth rate of
regarded as a curse and the parents are looked down
population declines. As growth gains momentum and
upon by society. All these economic and social factors
people cross the subsistence level of income, their
are responsible for a high birth rate in the country.
standard of living rises. The leading growth sectors
Along with high birth rate, the death rate is also high
expand and lead to an expansion in output in other
due to non-nutritional food with a low caloric value, and
sectors through technical transformations. Education
lack of medical facilities and of any sense of
expands and permeates the entire society. Popular
cleanliness. People live in dirty and unhealthy
education leads to popular enlightenment and opens
surroundings in ill-ventilated small houses. As a result,
the way to knowledge. It creates self-discipline, power
they are disease-ridden and the absence of proper
to think rationally and to probe into the future. People
medical care results in large deaths.
discard old customs, dogmas and beliefs and develop
The mortality rate is the highest among the children individualistic spirit and break with the joint family. Men
and the next among women of childbearing age. Thus and women prefer to marry late. The desire to have
unhygienic conditions, poor diet and the lack of more children to supplement parental income declines.
medical facilities are the reasons for a high mortality People readily adopt family planning devices. They
rate in this stage. This stage continued in Western prefer to go in for a baby car rather than a baby.
Europe approximately up to 1840. Moreover, increased specialization following rising
Second Stage: income levels and the consequent social and

In the second stage, the economy enters the phase of economic mobility make it costly and inconvenient to

economic growth. Agricultural and industrial rear a large number of children. All this tends to reduce

productivity increases and the means of transport the birth rate which along with an already low death

develop. There is greater mobility of labor. Education rate brings a decline in the growth rate of population.

expands. Incomes increase. People get more and The advanced countries of the world are passing

better quality food products. Medical and health through this last stage and the population is increasing
at a slow pace in them.
Conclusion: the most important factors of development, along with

The theory of demographic transition is the most the following:

acceptable theory of population growth. It neither lays

emphasis on food supply like the Malthusian theory,
nor does it develop a pessimistic outlook towards
population growth. It is also superior to the optimum
theory which lays an exclusive emphasis on the
increase in per capita income for the growth of In Economics, the term human capital is used
population and neglects the other factors which to define increase in productivity levels
influence it. The demographic transition theory is and human capacities due to education and health.
superior to all the theories of population because it is According to this approach, it is believed that
based on the actual population growth trends of the investment in education and health brings about an
developed countries of Europe. Almost all the indirect increase in the well-being of
European countries of the world have passed through the humans through increase in incomes.
the first two stages of this theory and are now in the Human capital theory emphasizes
final stage. Not only this, this theory is equally how education increases the productivity and
applicable to the developing countries of the world. efficiency of workers by increasing the level of
Very backward countries in some of the African states cognitive stock. of economically
are still in the first stage whereas all the other productive human capability, which is a product of
developing countries of the world are in the transitional innate. Abilities and investment in human beings.
stage two it is on the basis of this theory that
But there are problems on education that may affect
economists have developed economic-demographic
the quality of human capital.
models so that underdeveloped countries should enter
10 Major Challenges Facing Public Schools
the final stage and attain the stage of self-sustained
growth. Thus this theory has universal applicability.  Classroom Size.

 Poverty.

MODULE 6 – HUMAN CAPITAL: EDUCATION AND  Family Factors.

HEALTH  Technology.

 Bullying.

Lecture/Discussion  Student Attitudes and Behaviors.

Human capital is defined in the Oxford English  No Child Left Behind.

Dictionary as “the skills the labor force possesses and  Parent Involvement
is regarded as a resource or asset.” It encompasses Problems on Class Size
the notion that there are investments in people
Overcrowded room creates a deteriorating effect on
(e.g., education, training, health) and that these
education. Space for teacher’s supervision on
investments increase an individual's productivity.
students is hampered by increasing class size.
Human capital can include qualities like education,
Discipline becomes more difficult due to higher number
Technical or on-the-job training, health, mental and
of students inside the classroom while there is only
emotional well-being, professionalism. problem-
one teacher to attend to them. Burnout teachers seem
solving, people management and communication
to experience stress more due to this problem,
skills. It is known to many that human capital is one of
Problems on Poverty understanding a short simple statement about their

Poverty and education are inextricably linked, because everyday life.

people living in poverty may stop going to school so It is indeed a great for Filipino families to send their
they can work, which leaves them without literacy and children in school. They believe that education would
numeracy skills they need to further their careers. give their children knowledge and skills which could be

Access to high-quality primary education and give them greater job opportunites and thus a better

supporting child well-being is a globally- way of earning for themselves and for their families.

recognized solution to the cycle This knowledge, skills and attitude developed by an

of poverty.. Education is often referred to as the great educational system is what composes a human

equalizer: It can open the door to jobs, resources, and capital.

skills that a family needs to not just survive, but thrive. Philippines is one country with high literacy rate

Problems on Technology because of how Filipino values education.

Unfortunately, record shows that the allocated funds
Technology has also begun to change the roles of
for education is lowest compared to other Asian
teachers and learners. Technology is a powerful tool
countries such as Indonesia and Malaysia. The
that can support and transform education in many
question now is, does lower budget allocation leads to
ways, from making it easier for teachers to create
slower economic development?
instructional materials to enabling new ways for people
to learn and work together.

But there are constraints in using technology in

education. “We need to be careful to introduce
technology in thoughtful ways or else we will be left
with another generation of teachers who see
technology as nothing but overpriced distractions
rather than useful teaching tools.”

There are others problems on education that may

affect the achievement of highest potentials among the
The education sector is one of the priorities of the
human capital these are the bullying, family factors,
present administration. President Rodrigo Duterte
students attitudes and behavior and diminishing parent
signed into law the Free Education for all. In year
involvement.
2020, the budget given to the Education Sector was
Literacy rate
P654.6. The highest among the other departments of
The economic indicator to measure the ability
the government.
of the human capital to read and write, and do some
arithmetic is called literacy rate. It indicates how many
members of the given society is educated. Literacy
rate tells how effective and efficient the educational
system in a given country is.

What is the literacy rate in the Philippines 2020?

98.18%

Adult literacy rate is the percentage of people ages 15

and above whom can both read and write with
Deterioration of Human Capital Here is the list of Healthiest Population of the

The most common ways human capital World:

can depreciate are through unemployment, injury,

mental decline, or the inability to keep up with
innovation. Consider an employee who has a
specialized skill. If he goes through a long period of
unemployment, he may be unable to keep these levels
of specialization. The longer a
worker's unemployment duration, the larger the
chance that her human capital has depreciated.
Workers whose skills erode while being unemployed
are less productive upon re-employment than workers
whose skills do not erode.

To perform to the fullest the person should be in a

good health and thus gain potential to do the work.
Effective work is only done by a healthy person. Japan Healthcare Spending 2000-2021.
A healthy person can contribute to the growth and Japan Healthcare Spending - Historical Data
development of the economy by doing productive
Year Per Capita (US $)
work. Health itself is not only a part of human
capital but also contributes to human capital such as 2016 $4,174
education. Improved health (measured using life
2015 $3,733
expectancy) allows the working population to be more
productive in terms of new ideas and innovations. 2014 $4,099

Life expectancy is the key metric for assessing

population health. Broader than the narrow metric of The table above shows Japan Healthcare spending
the infant and child mortality, which focus solely at from 2014-2016. The table shows a consistent figure
mortality at a young age, life expectancy captures the of $4000 dollars per annum in the 3-year period. This
mortality along the entire life course. It tells us the implicates that the country is really investing on its
average age of death in a population. human capital.
The optimum population of Earth – enough to
guarantee the minimal physical ingredients of a decent
life to everyone – was 1.5 to 2 billion people rather
than the 7 billion who are alive today or the 9 billion
expected in 2050, said Ehrlich in an interview with the
Guardian. "How many you support depends on
lifestyles. A healthy world population means the
human capital have access to decent lifestyles.