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?Welfare trap

Imagine that you have been unemployed and seeking work for months?

Government benefit programs have helping you cover rent utilities and food.

Bet you are barely getting by, finally you hear back about a job application, you receive your first paycheck in months and things seem to be turning around but there’s a catch your new job pays just enough to disqualify you from the benefit program.

And not enough to cover the same costs, to make things worse you have to pay for transportation to work. And childcare while you were at the office, somehow you have less money now than when you were unemployed. Economists call this demoralizing situation The welfare trap .?

One of the many different poverty traps affecting millions of people around the world.Poverty traps are economic and environmental circumstances that really enforce themselves perpetuating poverty for generations .some poverty traps are tied to an individual circumstance’s , like a lack of access to healthy food or education, others can affect entire nation such as circus of corrupt government or climate change, but the cruel irony of ware fare traps in particular is that they stem from the very policy designed to battle poverty.

Most societies throughout history employed some strategies to help people in poverty in basic needs before the 20th century religious groups and private charities often led such initiatives today they are called welfare programs.

And they usually takes the form of government provided subsidies for housing food energy and healthcare, typically these programs are means tested, meaning that only people who fell below a certain income level are eligible benefits, this policy is designed to ensure and goes to those who need it most , but it also means people lose access as soon as they earn more in the qualification threshold regardless of whether or not they are financially stable enough to stay there this vicious cycle is harmful to both those in poverty and those outside of it, main stream economic models assume people are rational actors, Who weigh the cost and benefits of their options and choose the most advantageous path forward if those in poverty know they will gain no net benefit from working they’re incentivized to remain in government assistance. Of course people walk for many reasons, including societal norms and personal values, but income is a major incentive to pursuing employment.

And when less people take on new jobs the economy slows down ,keeping people in poverty and potentially pushing people on the cusp of poverty over the edge some have suggested the feedback loop could be removed by eliminating government assistance program altogether, but most agree the solution is neither realistic or humane , so how can we redesign benefits in a way that doesn’t penalize people for working , many countries have tried different ways to circumvent this problem.

Sam allow people to continue receiving benefits for a given Period after finding a job while others face out benefits gradually as income increases, these policies still remove some financial incentive to work,

But the risk of welfare trap is lower ,other governments provide benefits like education child care or medical care equally across their all citizens, one proposed solution takes this idea of universal benefits even further,

A universal basic income would provide a fixed benefit to all members of society, regardless of wealth or employment status, this is the only known-policy that could entirely remove welfare traps since any earn wages would supplement the benefit rather than replace it, In fact by creating a stable income floor below which no one can fall , Basic income might prevent people from falling into poverty in the first place, Numerous economist and thinkers Have championed this idea since the eighth century, but for now the universal basic income remains largely hypothetical, Exhaust it’s been trait in some places on a limited scale this local experiments don’t tell us much about how the policy would play out across an entire nation or a planet.

Whatever strategy governments pursue,

Solving the welfare trap requires respecting people’s agency and autonomy,

Only by empowering individuals to create long-term change In their lives and community can we begin to break the cycle of poverty.