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Poverty and inequality GapFill
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There are two recognised types of poverty in international economics. The first is poverty, which is when a person is unable to meet their basic needs for survival on a daily basis. As of 2015, the World Bank defines this as an income of $1.90 a day, adjusted for purchasing power parity (PPP), though some argue that the poverty line should be higher than this.
The second is poverty, which is poverty when compared to others in the same country. This does not have an internationally recognised definition as it varies from country to country; however, each country will generally have its own measure. In the UK, people earning below 60% of the median national income are considered to be in this bracket.
When discussing inequality, it is important to distinguish between income and wealth. Income is , representing people's regular earnings, while wealth is a , including the value of assets owned. It is possible for an individual to have a low income but be asset rich, especially in developed countries.
In an industrialised, capitalist economic system some inequality is inevitable. This is because some are of greater value on the labour market than others, and because owners of are more able to accumulate wealth than those reliant on wages for survival. Some argue that inequality helps to motivate individuals and underlies the creativity and dynamism of a capitalist system. However, others contend that inequality damages social cohesion and creates perverse incentives which accelerate negative , such as poverty, poor health and environmental destruction.
But while inequality may be inevitable under the contemporary global economic model, the extent of inequality is highly dependent on factors such as the level of economic development, organised labour, , and prices.