Is there a magic formula for ending poverty? American economist Jeffrey Sachs has one, but it's not magical. It is based on China's growth in four decades and a contrasting social scenario in the United States. 

Sachs, Director at the Center for Sustainable Development at Columbia University, highlights three factors: overall economic growth and technological change, social and demographic forces, and the government's response through public policies. 

Economic growth has been helped by digitalization and automation of the economy, which massively changed the labor market with skilled workers' incomes going up. Racial and ethnic components of society as well as geographical factors are behind different labor market trends. Family structure is a key factor in this. Sachs says a family with a large number of children will have more poverty.

Public policy response has two dimensions. The government provides vital social goods, such as health, education and housing; and where needed, direct income transfers, cash transfers, various kinds of social protection for low-income households, and pension.

Sachs contrasts the situations in China and the U.S. In China, health coverage has expanded, so has education. There is modest income support. In the U.S., the economic growth is much lower as a mature economy. The technological changes have left at least half of the households without college education falling further and further behind.

"We still have pervasive racial discrimination… Inequality has risen substantially, growth has not been enough to propel at the bottom," he said.

In the future, education will remain paramount for a reasonable livelihood. So will universal access to quality social services, from health and education to housing. "The United States has allowed these social services to collapse and in China [they are] still not strongly in place," he said.

He sees a need for all developed countries to allocate at least 20 percent of their GDP to meet these requirements. The Scandinavian countries are a role model with their allocation of 45-50 percent of the national income to provide better quality health, education and social support.

With 2020 marking the final year for China to achieve the goals of eradicating absolute poverty, China is exploring the best practices from around the world along with Chinese measures tailored for local situations.

Sachs spoke at a webinar on how to end poverty on October 13 along with other experts.

Copyedited by Sudeshna Sarkar 

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