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Note: This is not a model answer for the essay, but it will undoubtedly serve as a guide for you while you write the essay!

Assume you’ve been jobless and looking for jobs for months. Government assistance programmes have helped you pay for rent, utilities, and food, but you’re still struggling to make ends meet. Finally, you get a response to your job application. You get your first pay in months, and things appear to be looking up. However, there is a catch. Your new employment pays just enough to keep you out of the benefit programmes while not covering the same expenses. To make matters worse, you must pay for transportation to and from work, as well as daycare while you are there. You have less money now than you had when you were unemployed for some reason.

The welfare trap, as economists name it, is one of the many different poverty traps that millions of people around the world are caught in. Poverty traps are situations in which economic and environmental factors reinforce each other, prolonging poverty for generations. Some poverty traps are caused by a person’s circumstances, such as a lack of good food or education. Others, such as corrupt government cycles or climate change, have the potential to affect entire nations. The tragic irony of welfare traps, in particular, is that they arise from programmes aimed at alleviating poverty.

Throughout history, most cultures have adopted certain ways to assist poor people in meeting their fundamental needs. Religious organisations and private charity were frequently in charge of such activities prior to the twentieth century. These are now known as welfare programmes, and they typically take the form of government-funded housing, food, energy, and healthcare subsidies. Typically, these programmes are means-tested, which means that only those who earn less than a specific amount are eligible for assistance. This policy aims to guarantee that aid reaches those who need it the most. However, it also implies that participants lose access to the programme once they earn more than the qualification criteria, regardless of whether or not they are financially stable enough to stay.

Both those who are poor and those who are not are affected by this vicious cycle. People are rational actors, according to mainstream economic models, who consider the costs and benefits of their options and take the most advantageous course forward. Those in poverty are encouraged to stay on government aid if they know they will earn no net advantage from working. People work for a variety of reasons, including cultural expectations and personal ideals. However, obtaining job is mostly motivated by a desire to earn money. When fewer individuals take up new jobs, the economy slows, keeping people in poverty and maybe pushing those on the verge of poverty over the edge.

Some have stated that the only way to break the feedback loop is to eliminate all government assistance programmes. However, the majority of people think that the solution is neither practicable nor humane. So, how can we rethink benefits so that individuals aren’t penalised for working? Many governments have attempted to solve this problem in various ways. Some allow people to keep receiving benefits after finding work for a set length of time, while others gradually phase out payments as income rises. Although these policies still reduce financial incentives to work, the likelihood of falling into the welfare trap is reduced. Other governments provide equal access to benefits such as education, childcare, and medical care to all of their inhabitants.

One proposed solution expands on the concept of universal benefits. A universal basic income would distribute a set amount of money to everyone in society, regardless of their wealth or job position. This is the only programme that has been identified as having the potential to completely eliminate welfare traps, as any earned wages would complement rather than replace the benefit. In fact, basic income may prevent people from sliding into poverty in the first place by providing a steady income level below which no one may go.

Since the 18th century, a number of economists and scholars have advocated for this concept. However, for the time being, universal basic income is essentially hypothetical. Although it has been tried on a small scale in some areas, these local tests don’t tell us much about how the policy might play out across an entire country— or even the entire globe.

Whatever technique governments use to solve the welfare trap, people’s agency and autonomy must be respected. We can only begin to break the cycle of poverty by empowering individuals to make long-term changes in their lives and communities.

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