Question

Its generally true the ownership of property is fundamental to the discussion of both negative and positive externalities

_____________________ video on the mind being a terrible servant speaks to the issue of bias and heuristics in day to day decision making.

Give three reasons why the current pandemic may impact poverty and wealth distribution.

Answer 1

Answer to the question:

The current pandemic has weakened the production bases of almost all the countries across the globe. The adverse impact of current pandemic will be most deeply felt in the poorest regions of the world. With the collapse of economic activities across the globe; the income levels of the common masses also begin to fall. Thus, with its direct impact on income level; the current pandemic has adversely affected the wealth distributions and poverty levels across the globe. The following are three major reasons of its impact on poverty and wealth distribution:

1. Effects of current pandemic on livelihood:

In general, the poor work largely in agriculture and also informally engaged in other sectors. Those employed in the informal sectors in urban areas are likely to be more badly affected as they are more likely to bear severe initial impacts of current pandemic in the form of job loss. With the loss of jobs and incomes, they face the risk of slipping into the poverty trap. With loss of income, there exists every possibility of growing income inequality in the urban regions. However, those engaged in agriculture will not face the adverse impacts of current pandemic initially but they are also likely to be affected by a decline in demand in urban areas over time.

2. Impact on savings:

The poor mostly live in the rural regions and they tend to depend on remittances from urban migrants. The economic shutdowns in urban regions force these economically disadvantaged people to look into other alternative activities for livelihood. In the absence of adequate earnings, the poor may be forced to adopt those strategies which may have the long lasting negative effects; such as sale of productive assets or livestock, decrease in consumption or reduction in investment in human capital. All these strategies may distort the distribution of income or even may push the vulnerable population into the poverty trap in the long run.

3. Impacts through public services:

The economically disadvantaged population mainly rely on public services to fulfil their social needs such as health and education. Due to limited access to high quality medical facilities, the current pandemic will have devastating impacts in the case of illness in poor families. The closing of schools during this current pandemic may also have harmful impacts on health conditions of poor children. This is because the poor families mainly depend on school feeding programs to meet the nutritional needs of their children. In the long run, all of these factors such as lost months of schooling, inadequate food intakes, poor health conditions will affect their earning potential and they can be easy victim of poverty trap.

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