Advantages & Disadvantages of Low-Income Families

As long as human society exists, poverty exists. The possibility of eradicating poverty at any time in the near future is very small. Nevertheless, positive measures have been taken to mitigate the serious effects of poverty. Low-income households face many challenges and emphasize that other families do not, but the poor can benefit from being able to reduce the burden.

The so-called social safety net was created from the beginning of the 20th century to the middle of the 20th century and is a reaction to the more serious impact of urbanization and industrialism. Most developed countries have access to government aid to the poor to mitigate the negative impact of some poverty. Government services include welfare benefits, food stamps, medical assistance, etc. Low-income households can use these services to alleviate pain

Also in the 20th century most governments adopted a kind of progressive taxation to cover their expenses. Under this system more taxes will be paid as more revenue is earned each year. As a result, low-income class individuals and families can enjoy very low tax rates. There are quite a few individuals and households who do not pay income tax in the United States.

So far, one of the most serious side effects of poverty is that it tends to be a victim of crime. The fact shows that the crime is disproportionate for the victim. There are many reasons for this, including the fact that the poor often live in low-income areas where the crime rate is already high. This is a big disadvantage for low-income households.

Another very unfortunate side effect of having low income is that it often makes it harder for it to receive better education. Public schools fund mainly through the local tax in the US. In already poor areas, it is difficult to collect funds for school. Private school prices make it impossible for them to reach most low-income households and make public schools the only option for educating their children.

Students from low-income families and minority students are often at a disadvantage. Negative and Hispanic students will score lower with standardized tests and less likely to acquire a university degree. Students from wealthier families have always achieved better SAT scores than low-income family students. The lack of reliable high-speed internet only makes the so-called achievement gap even larger. Now low-income and minority students may also need to fight the disparity between students who can access the Internet and students who can not access the Internet. This new inequality is often referred to as the digital divide, which is an increasing problem in education.

An increase in inequality does not necessarily mean an increase in poverty and disadvantage. For example, this may mean that the income of high-income households is borne by the cost of middle-income households, while the status of low-income households is not getting worse. However, research using the Henderson poverty line shows that poverty increased in the 1980s. Saunders (1993) found that poverty after housing and housing increased between 1981-82 and 1989-90. The Australian Institute for Health and Welfare (1993) also found an increase in the number of the poor. Thereafter, in the 1970s home poverty increased dramatically (Gallagher, 1985). Another study, leaving the Henderson poverty line and using a revenue definition different from the median income, found that the poverty rate declined in the 1980s due to the operation of the tax transfer system (Harding and Mitchell 1992).

First we will focus on low-income households. As the marginal income tax rate rises, tax incentives for housing ownership will increase, so low-income households will increase the cost of private housing and other conditions will not change. Therefore, in the user cost model, low-income households are expected to be unlikely to own their own house. In addition, both housing consumption and investment demand will increase with income. The former is because home services are normal, the latter because high-income households want to take more dangerous assets. Recall that investment demand is more sensitive to wealth and income than consumer demand (Ioannides and Rosenthal (1994)). Therefore, investment demand may be initially lower than consumer demand, but it rises rapidly as income increases, and in some cases it may exceed the former. Therefore, even in the investor's consumer demand model, it is estimated that low-income households are unlikely to possess their own households27.