Income is often a major factor in the life and culture of a country. In order to understand how income affects society, we need to have an understanding for some basic concepts. The first concept we will explore is what economists call “household income.” This term refers to the total amount of money that all members in a household receive during one year from various sources such as employment, investments, and government benefits. When households earn income, they are more likely to be able to afford things like food or shelter because their purchasing power increases with every dollar earned by individual members.
The second concept we will explore is the “in-work poverty trap.” This term refers to a situation in which someone cannot find work because they lack skills, but then they do not have enough money to pay for courses that would help them acquire those skills. The negative cycle of an individual being unemployed and consequently too poor to afford self-improvement efforts can be devastating. When households earn income, their purchasing power increases with every dollar earned by individual members. There are two aspects of household income: total amount received from various sources during one year and what it does for society. In order to better understand how this influences society, it’s important first look at some basic concepts such as the in-work poverty trap–