Possible Economics factors of poverty include

Recession. In general the major fluctuations in poverty rates over time are driven by the business cycle. Poverty rates increase in recessions and decline in booms. Extreme recessions, such as the Great Depression have a particularly large impact on poverty.


Economic inequality. Even if average income is high it may be the case that the poverty rate is also high if incomes are distributed unevenly. However the evidence on the relationship between absolute poverty rates and inequality is mixed and sensitive to the inequality index used. For example, while many Sub-Saharan African countries have both high inequality and high poverty rates, other countries, such as India have low inequality and high poverty rates.


In general the extent of poverty is much more closely related to average income than it is to the variance in its distribution. At the same time some research indicates that countries which start with a more equitable distribution of income find it easier to eradicate poverty through economic growth. In addition to income inequality, an unequal distribution of land can also contribute to high levels of poverty.


Shocks to food prices. Poor people spend a greater portion of their budgets on food than richer people. As a result poor households, and those near the poverty threshold can be particularly vulnerable to increases in food prices. For example in late 2007 increases in the price of grains led to food riots in some countries. Decreases in food prices can also affect poverty although they tend to impact a