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The Poverty Trap: Definition, Impact & Solutions

Instructor: Elisha Madison

Elisha is a writer, editor, and aspiring novelist. She has a Master's degree in Ancient Celtic History & Mythology and another Masters in Museum Studies.

A poverty trap refers to a situation in which people get stuck in a cyclical pattern of poverty. This lesson discusses how and why this happens, the economic and environmental implications, and a framework for alleviating poverty

What Is a Poverty Trap?

Do the effects of poverty lead to even more poverty? The simple answer is yes. This is especially true for people or economies that are caught in a poverty trap. A poverty trap is a situation that creates a cyclical pattern of poverty. Unless something is done to change the situation, the cycle cannot be broken, leaving generation after generation 'trapped' in a constant state of poverty.

Poverty Trap Causes

When many people think about poverty, they think about lack of money or low wages. Although low wages certainly contribute to poor financial situations, there are many other conditions in an economy that can cause poverty traps.

  • Poor work opportunities: In population dense areas, it is difficult for people to even find jobs, let alone jobs that pay well.
  • Inability to pay for education: Without money, people cannot pay for the education they need to get a better job.
  • Violence : Many poverty stricken areas, like Somalia, are so stuck in a poverty trap that people fight for food, which creates very dangerous and violent areas. Violence can inhibit education, industry, and an individual's ability to excel.
  • Expense of goods and services: In poor areas, certain products and services, including food and medical care, can be unaffordable for large portions of the population. People who are hungry, sick, or cannot afford transportation cannot work.
  • Lack of industry growth: In extremely poor areas, even if there is room to build buildings for large industries, the corruption of government, the price of power, and the lack of skilled labor can deter business and industry growth.
  • Poor sanitation: Poor sanitation, or tainted resources (like bacteria tainted water), can lead to disease, which spreads quickly and can be difficult to control in countries that are already lacking essential resources.
  • Lack of medical care: Due to the lack of money or resources, people do not get the medical care they need and die due to starvation, malnutrition, and inability to get the medical insurance or supplies that are necessary.

Effects of the Poverty Trap on the Environment

Poverty traps create a cycle within an area that becomes almost impossible to fix without some sort of aid. The problem is, without people earning a living wage, they cannot invest in products within an area. Without money spent in businesses, then businesses go belly up, people lose work and money, the area becomes even more downtrodden than before.

In the United States, cities like Detroit, are good examples of how poverty can turn into a poverty trap. When Detroit lost manufacturing jobs, people with resources moved out of the city, leaving behind poor neighborhoods. More businesses closed, public services experienced cutbacks, and poverty increased. In 13 years alone, the number of high poverty neighborhoods grew from 51 to 184. People in this city are still struggling to break what is becoming a pattern of poverty.

Poverty traps have other effects as well:

  • Environmental issues: In areas where poverty is high, the population is usually also dense, leading to precious resources being depleted faster as well as the tainting of the current resources like water.
  • Degradation of education: In areas that are extremely poor, education is a luxury. This means that kids do not finish standard school years, because students need to work instead. This can lead to an uneducated population with limited economic opportunities.
  • Increase in violence: Impoverished areas often experience an increase in crime and violence. This is dangerous to the residents. It also impacts how public funds are used in the community.

Solutions for Poverty Traps

Alleviating poverty can be difficult, particularly in economies that suffer from poverty traps. Social mobilization is a large part of finding solutions for these issues. To do this communities and states have to raise awareness and communicate how people can volunteer and get involved to help those in need.

Beyond social mobilization, it is important to have multi-pronged solutions that directly address the causes of the poverty trap. Some examples include: agricultural and human development and small-scale industry development.

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