Abstract
The pervasiveness of poverty continues to be a daunting challenge for Bangladesh. This study attempts to examine the effect of different livelihood diversification on rural household poverty and income inequality. A panel dataset, which is used in this study, was collected in the three different years (1988, 2000 and 2008) from 62 villages across 57 districts of Bangladesh. Besides, 153 households from three districts of Bangladesh were also randomly selected as primary data. Multidimensional poverty index (MPI) was used to measure poverty whereas Gini coefficients and decomposition of Gini coefficients were used to measure inequality and to identify marginal effects of certain livelihood income source on total inequality. The results reveal that diversifying livelihood through income source changes has an impact on the poverty level and inequality among rural households. Following these changes, the overall poverty situation has been improving and income distribution has been worsening over the years. Households drastically reduce their poverty by diversifying their livelihood from only agriculture to part-time farming. Among different non-farm income sources, only self-employment has a positive contribution in decreasing income inequality since 2000. Incomes from migration and wage-employment widen income inequality in rural Bangladesh. Therefore, policy options should strive to expand rural industry and scope of self-employment in the rural areas along with agricultural sector development.
Highlights
The results reveal that diversifying livelihood through income source changes has an impact on the poverty level and inequality among rural households
The pervasiveness of poverty continues to be a stubborn problem in Bangladesh, where about 22 million people still living below the poverty line (World Bank, 2018)
The poverty reduction rate of household depends on which types of activities households are involved in
Summary
The pervasiveness of poverty continues to be a stubborn problem in Bangladesh, where about 22 million people still living below the poverty line (World Bank, 2018). In the last report of HIES (HIES, 2019), the headcount poverty rates under the upper and lower poverty line have been found 24.3% and 12.9% respectively in 2016. These rates have further decreased to 21.0% and 10.4% in 2018 (Alam, 2019). In 2016, about 34.4 percent marginal and 23.8 percent small landholders lived under the poverty line. Poverty and inequality mostly relates to the income of the households, which they receive from a diverse portfolio of activities. The economic situation and the standard of living of the households cannot be fully described by only on-farm income (Castagnini et al, 2004). Participation in rural non-farm activities has two different as.ideasspread.org
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