IGCSE Economics 0455

Economic Development - Poverty

Causes of Poverty: Age

Poverty is a complex issue with multiple contributing factors. This section focuses on how age can be a significant cause of poverty, examining the challenges faced by different age groups and the economic implications.

Impact on Children

Children are particularly vulnerable to poverty due to their dependence on adults for economic support. Several factors contribute to child poverty:

• Limited earning potential: Children typically do not have the skills or legal right to participate in the formal labor market.
• Dependence on family income: Their well-being is directly tied to the financial stability of their parents or guardians. Economic hardship within the family can severely impact their access to education, healthcare, and adequate nutrition.
• Reduced educational opportunities: Poverty can lead to school dropout rates, limiting future prospects and perpetuating the cycle of poverty. Children may be forced to work to support their families.
• Health issues: Poor nutrition and inadequate healthcare are common in impoverished communities, leading to health problems that can hinder their development and future earning potential.

Impact on the Elderly

Elderly individuals also face increased vulnerability to poverty, often stemming from a combination of factors:

• Reduced or no income: Many elderly people rely on pensions, which may be insufficient to cover living expenses, especially in the face of rising costs of healthcare and housing.
• Healthcare costs: Older people are more likely to require healthcare, which can be expensive and strain limited financial resources.
• Limited employment opportunities: Ageism in the labor market can make it difficult for older individuals to find suitable employment, even if they possess valuable skills and experience.
• Social isolation: Poverty can lead to social isolation, which can negatively impact mental and physical health, further exacerbating their vulnerability.

Economic Implications

Poverty across all age groups has significant economic implications for a country:

• Reduced economic productivity: A large impoverished population represents a loss of potential economic contributors. Children who are not educated and healthy will have lower future productivity. Elderly individuals struggling financially may not be able to contribute to the economy.
• Increased social welfare costs: Governments must allocate resources to provide social welfare programs (e.g., unemployment benefits, pensions, healthcare) to support impoverished individuals, placing a strain on public finances.
• Higher crime rates: Poverty can be associated with higher crime rates, leading to increased costs for law enforcement and the justice system.
• Reduced economic growth: Poverty hinders overall economic growth by limiting human capital development and reducing consumer demand.

Table summarizing the impact of age on poverty

Age Group	Causes of Poverty	Economic Implications
Children	Dependence on family income, limited earning potential, reduced educational opportunities, health issues.	Reduced future productivity, increased social welfare costs, perpetuation of the poverty cycle.
Elderly	Reduced or no income, healthcare costs, limited employment opportunities, social isolation.	Reduced economic contribution, increased social welfare costs, strain on public finances.

Addressing age-related poverty requires a multi-faceted approach, including investments in education, healthcare, social security, and policies that promote inclusive labor markets. These policies aim to empower individuals across all age groups to overcome economic hardship and contribute to national prosperity.