CAIE IGCSE Economics 5.2.3 Policies to alleviate poverty & redistribute income
Practise judging poverty policies, including education, healthcare, benefits, progressive taxation, growth and minimum wages.
- Syllabus
- 2027–2029
- Course
- Economics 0455
Exam points
- explain how education or healthcare spending can raise skills, productivity and incomes
- compare benefits, progressive taxation and minimum wages for redistribution effects
- evaluate whether fiscal policy reduces poverty through jobs, incomes and trade-offs
5.2.3—Policies to alleviate poverty and redistribute income question 1
Read the source material carefully before answering Question 1.
Source Material: Cambridge (UK) and Education
Cambridge ranks number one amongst all UK cities in terms of the percentage of workers with a university qualification. It is also ranked number two in the UK in terms of the percentage of people aged 18-29. This is due to the high number of university students in Cambridge. Although the city has a relatively small population, its contribution to the overall size of the UK economy is significant.
Many firms in Cambridge operate in the education, healthcare, research and development, and hi-tech manufacturing industries. Cambridge firms' exports are highly knowledge-intensive, making them highly priced and price-inelastic in demand. Increasing global incomes have also increased the demand for services such as education from Cambridge.
The increase in the size of the education industry has the potential to reduce poverty. This is because a more educated labour force is able to earn higher wages and also have access to more information on health. Table 1.1 shows the percentage of population aged 25-64 with a university degree and the GDP per head in selected countries in 2019.
Table 1.1 Percentage of population aged 25-64 with a university degree and the GDP per head in selected countries in 2019
Many of the people who live in Cambridge are strong supporters of globalisation and free trade between countries. A large number of firms in Cambridge depend on export revenues.
Cambridge is an attractive location for growing firms because of the availability of many highly skilled and educated workers from all over the world. It has good infrastructure including access to ultra-fast broadband and transport links to other cities and international airports. However, firms may be faced with high land and office costs. In 2019, Cambridge was the city with the third highest house prices in the UK. Poor air quality may also discourage workers from moving to Cambridge.
Explain how having a more educated labour force can reduce poverty.
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