Causes of poverty

G3 Economics - syllabus K343, 2027

What this lesson teaches

  • I can explain the causes of poverty: unemployment, low wages, illness, age and environment.

    Syllabus K343, 5.2.2. Causes of poverty: unemployment; low wages; illness; age; environmental factors

Make a guess

Can a person who works full time still be poor?

  1. No. Poverty comes from having no job, not from low pay.
  2. Yes, if the wage is too low.
  3. No, because full-time work pays enough to live on.
Show the answer

Yes, if the wage is too low.

Low pay in unskilled or insecure jobs can leave full-time workers short of money. Unemployment is only one cause of poverty.

Poverty is caused by unemployment, low wages, illness, age and environmental factors such as droughts and floods.

Unemployment: people without jobs lose their main source of income. Long-term unemployment can drain savings and skills.

Low wages: people in unskilled or insecure jobs may work full time and still earn too little to meet their needs.

Illness and disability can stop people working, while raising their spending on healthcare. Age matters too: children depend on others, and older people with no pension or savings may have little income.

Environmental factors, such as droughts, floods and poor soil, destroy crops and homes, especially for farmers in poorer countries. Climate change can make these events more frequent.

Main causes
Unemployment, low wages, illness, age, environmental factors.
In-work poverty
Working full time but earning too little to meet needs.
Environmental shock
Droughts or floods that destroy crops, homes and income.

Worked example: One household's path into poverty

Follow a farming family in a drought-prone region.

  1. Environmental shock: a drought ruins the harvest, so the family's income collapses.
  2. Illness: with less food, a parent falls ill and cannot work.
  3. Debt: the family borrows to pay for medicine and food.
  4. Result: without savings or insurance, the family falls into absolute poverty.

Watch out for this

People are poor only because they do not work.

Many people in poverty do work but earn low wages. Illness, age and environmental disasters also cause poverty.

Check your understanding

Which is an environmental cause of poverty?

  1. A worker retires without a pension.
  2. A worker earns the minimum wage.
  3. Repeated floods destroy farmers' crops.
Show the answer

Repeated floods destroy farmers' crops.

Right. Natural events can wipe out income.

Check your understanding

Which event is most likely to push a household into poverty?

  1. The earner gets a promotion with higher pay
  2. Interest rates on its savings rise
  3. The only earner falls ill and cannot work
  4. The government cuts income tax rates
Show the answer

The only earner falls ill and cannot work

Right. The household loses its main income while its costs, such as medical bills, rise.

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