EXPLAIN FURTHER THE FOUR AREAS OF INTERVENTION & GIVE EXAMPLES OF EACH.

5.5 Policy Options on Income- inequalityr and Poverty: Some Bail: Comideratioru Areas of intervention Developing countries that aim to reduce poverty and excessive inequalities in their distribution of income need to know how best to achieve their aim. What lrinds of economic and other policies might governments in developing countries adopt to reduce poverty and inequality while maintaining or even accelerating economic growth rata? As we are concerned he re with moderating the size distribution of incomes in general and raising the income levels of people living in poverty, it is important to understand the various determinants of the distribution of income in an economy and see in what ways government intervention can after or modify their effect. The main focus of this section is on the relationship between income inequality and poverty. We examine the effects of policies and programs involving non income aspects of poverty in the subsequent chapters in Part Twoparticularly with respect to health, nutrition, and education in Chapter 3. We can identify four broad areas of possible government policy intervention, which correspond to the following four major elements in the determination of a developing economy's distribution of income. 1. Altering the functional distribution - the returns to labor, land. and capital as determined by factor prices, utilization levels, and the consequent shares of national income that accrue to the owners of each factor. 2. Mitigating the size disbibution the functional income distribution of an economy translated into a size distribution by knowledge of how ownership and control over productive assets and labor skills are concentrated and distributed throughout the population. The distribution ofthese asset holdings and skill endowmen ultimately determines the distribution of personal income. 3. Moderating {reducing} the size distribution at the upper levels through progressive taxation of personal income and wealth. Such taxation increases government revenues that decrease the share of disposable income of the very rich revenues that can, with good policies, be invested in human capital and rural and other lagging infrastructure needs, thereby promoting inclusive growth. {An individual or family's disposable income is the actual amount available for expenditure on goods and services and for saving.) 4. Moderating {increasing} tile size distn'bution at the lower levels through public expenditures of tax revenues to raise the incomes of the poor either directly {e.g., by conditional or unconditional cash transfers] or indirectly {e.g., through public employment creation such as local infrastructure proiects or the provision of primary education and health care}. Such public policies raise the real income levels of the poor above what their personal income levels would otherwise be, and, as will become clear in later chapters, can do so sustainably when they build the capabilities and assets of people living in poverty