A Brief Note On Poverty And Its Effects On The United States

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2. Poverty

In 2013 more than half of the Honduran population lived below the poverty line, with six out of ten rural families living in extreme poverty. Honduras also ranked among the most unequal countries in the region, and its middle class was among the smallest in LAC. Low levels of economic inclusion, limited social mobility, and the extreme vulnerability of lower income households to a wide range of shocks have made poverty in Honduras especially deep and intractable. Over the past 15 years more and more Hondurans have left the country to seek opportunities abroad, particularly in the US, and due to years of large-scale migration Honduras now has one of the world’s highest levels of remittances as a share of GDP. Although remittances have enormous potential to reduce poverty and increase incomes among households in the lower 40 percent of the income distribution, emerging evidence suggests that they may also be causing Dutch Disease effects, as well as draining the country’s human capital stock and potentially discouraging labor force participation among domestic workers. These dynamics have had significant effects on poverty trends. Remittances, together with labor income and employment, have been the main drivers of shifting poverty levels over the last decade. Cash transfers have had a positive impact on extreme poverty and social indicators, but their scope is very limited compared with similar programs elsewhere in the region. While structural reforms and

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