The poverty rate is what percentage of the population lives below the poverty line, which the amount of income that it takes to purchase the necessities of life determines. Poverty and income inequality are not the same thing.

A poverty trap occurs when government-support payments decline as the recipients earn more income. Income inequality refers to the disparity between those with higher and lower incomes.

poverty — the situation of being below a certain level of income one needs for a basic standard of living. poverty trap — antipoverty programs set up so that government benefits decline substantially as people earn more income—as a result, working provides little financial gain. income inequality — when one group receives a disproportionate share of total income or wealth than others. poverty line — the specific amount of income one requires for a basic standard of living.