Aspects of the Poverty Scenario in Bangladesh During 2010-2016

Abstract

This paper investigates a number of inter-related issues pertaining to the recent poverty scenario of Bangladesh – viz., (a) making sense of a marked slowdown in the pace of poverty reduction after 2010, (b) identifying the structural determinants of poverty reduction, and (c) examining regional divergence in the rate of poverty reduction. The analysis identifies falling real wages as the main proximate reason for both slowdown in poverty reduction and rise in income inequality in recent years. The underlying reason, however, is a massive upsurge in rural-to-urban migration which has exerted a downward pressure on real wages in the urban labour market, with repercussion on the rural labour market as well. The main determinants of poverty reduction in the recent years are found to lie in a couple of structural changes – (a) occupational shift, from relatively low-remuneration activities to relatively high-remuneration activities, induced by economic growth and (b) the spread of education, which enables workers to move into relatively high-occupation activities and to earn higher income within the same occupation. Divergent performance in terms of the same two structural factors – namely, occupational shift and the spread of education – are also found to explain a large part of the regional divide in the success in poverty reduction, although additional factors – related to geography and demography – may also be at work.