Poverty Trap

Poverty trap is understood differently across disciplines. In the social sciences, the concept, primarily employed at the individual, household, or community level, describes a situation in which escaping poverty becomes impossible due to unproductive or inflexible resources. A poverty trap can also be seen as a critical minimum asset threshold, below which families are unable to successfully educate their children, build up their productive assets, and get out of poverty. Extreme poverty is itself a poverty trap, since poor persons lack the means to participate meaningfully in society. In economics, the term poverty trap is often used at national scales, referring to a self-perpetuating condition where an economy, caught in a vicious cycle, suffers from persistent underdevelopment (Matsuyama, 2008). Many proposed models of poverty traps are found in the literature.