Who are the ultra-poor and how can development policy address their particular needs? In today’s blog, Professor Robin Burgess discusses the results of a research project with the Bangladesh-based development NGO BRAC

Burgess, Robin

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20/06/2017 Tackling extreme poverty: In conversation with Robin Burgess - IGChttp://www.theigc.org/blog/tackling-extreme-poverty-in-conversation-with-robin-burgess/ 1/5Authors Robin BurgessProfessor of EconomicsLondon School ofEconomics and PoliticalScience (LSE)Published on: 9 Dec 2015Countries: Asia, BangladeshResearch themes: Entrepreneurship,Firms Tackling extreme poverty: Inconversation with Robin BurgessWho are the ultra-poor and how candevelopment policy address their particularneeds? In today’s blog, Professor RobinBurgess discusses the results of a researchproject with the Bangladesh-baseddevelopment NGO BRAC.The World Bank defines the poor as those who live on less than$1.90 (USD) day, but millions of people in the developingworld survive on even less. Trapped in low-skilled, insecure,seasonal work, they live extremely precarious economic lives.With low assets and few skills, their labour is often their onlyresource. They are the ultra-poor.I first became interested in this group while working onresearch on famines in British India where I found thatagricultural labourers were heavily represented in the deathtolls. Subsequent research on post-Independence India foundthat extreme weather patterns (very hot days) are associatedwith increased death rates in rural India. Although famines area thing of the past in India, extreme weather damages crops,such as rice, affecting the size of the harvest and hence theemployment prospects of agricultural workers. This can bedisastrous for poor agricultural workers who often depend onthese daily wages for survival. Therefore when, in 2006, I cameacross a BRAC programme trying to change the occupations ofthis ultra-poor group in Bangladesh, it was something of aeureka moment. I felt that here was an opportunity to dosomething for a group of workers (casual labourers) who hadbeen stuck in poverty for generations.20/06/2017 Tackling extreme poverty: In conversation with Robin Burgess - IGChttp://www.theigc.org/blog/tackling-extreme-poverty-in-conversation-with-robin-burgess/ 2/5“Labourer in Naogaon District, Bangladesh © BRACWhat also attracted me to this work is that this is a poverty trapfor many. Casual labour is often the dominant form ofemployment in rural areas. Without the skills necessary toengage in more productive jobs, or the opportunities to save orborrow, to finance the purchase of productive assets or acquirehuman capital, the ultra-poor choose from a limited number oflow paying and irregular jobs – most commonly agriculturalwage labour or domestic service. In contrast, wealthierhouseholds in the same communities tend to be better insulatedfrom seasonality and income shocks.As depicted below, within poor villages in Bangladesh,wealthier households spend more time than the ultra-poor inmore productive and stable self-employment typically rearinglivestock. What is even more striking is that upper and middleclass women in these villages work for more days of the yearthan the ultra-poor because the types of employment the ultra-poor are involved in only demand their labour at certain timesof the year.The BRAC model: Targeting the ultra-poorSeveral previous studies that have tried to increase theproductivity and incomes of the poor by improving their accessto capital or skills, have had disappointing results. In contrast,the Bangladesh-based development NGO, BRAC developed aprogramme targeted at the ultra-poor that used a ‘big-push’approach, combing both a large-scale asset transfer and skillstraining. The programme has helped some of the poorestwomen to expand their hours of self-employment work inlivestock rearing.Without the skills necessary to engage in moreproductive jobs, or the opportunities to save or borrow,to finance the purchase of productive assets or acquirehuman capital, the ultra-poor choose from a limitednumber of low paying and irregular jobs – mostcommonly agricultural wage labour or domestic service.”Women in the programme are offered a range of productiveassets, such as livestock, or assets for cultivating vegetables andmaking and selling handicrafts. The overwhelming majority –20/06/2017 Tackling extreme poverty: In conversation with Robin Burgess - IGChttp://www.theigc.org/blog/tackling-extreme-poverty-in-conversation-with-robin-burgess/ 3/5making and selling handicrafts. The overwhelming majority –97 per cent – choose livestock, with a cow or cow-goatcombination, possibly because they see wealthier women intheir villages rearing these animals.The livestock received by each participant was valued atapproximately $140 (USD)[1], nearly double the averagebaseline wealth of households eligible for the programme. Atraining programme of equivalent value was also provided overtwo years to support recipients in working with their newassets. Limited savings and access to credit mean that mostultra-poor households cannot afford such assets on their own.BRAC staff talking with CFPR-TUP member in a meeting in Sampur slum, Sutrapur, Dhaka.How the programme worksOnce a village was selected, BRAC conducted a householdcensus documenting the household’s head, size, andoccupations. Household wealth data was derived from aparticipatory wealth valuing organised by BRAC in each village.The women from the poorest households are offered theopportunity to take part in the programme.Our research team worked with BRAC to develop a randomisedcontrol trial, a simple but rigorous test to assess whether theultra-poor programme is effective at transforming the economiclives of these women. We evaluated 1309 communities in 13 ofBangladesh’s most vulnerable districts.We surveyed households two, four, and seven years after theprogramme’s implementation. The study tracked all poorhouseholds, both eligible and ineligible for the programme, forcomparison.Unlike evaluations of similar programmes, our study tracked anadditional 10 per cent random sample of households from otherwealth classes. This was used to assess the effect of the transferson other wealth classes in the village and to rule out thepossibility that gains to ultra-poor households came at theexpensive of non-eligible households.Key resultsOne of the key things I was interested in, particularly forwomen who had been associated with the programme for fouryears, was whether they had diversified into other businesses. Itturned out, a large number had.20/06/2017 Tackling extreme poverty: In conversation with Robin Burgess - IGChttp://www.theigc.org/blog/tackling-extreme-poverty-in-conversation-with-robin-burgess/ 4/5“turned out, a large number had.Strikingly, although programme households were permitted toliquidate the assets after the programme ended, the vastmajority not only retained their initially transferred livestockbut many even purchased additional livestock.Access to livestock enables ultra-poor women to spend moretime in self-employment. Four years on, the women worked25% more days in the year and increased their average earningsby 37%.Results persist seven years after the start of their programme,and five years after programme support ends. The fact thathaving access to self-employment seems to drive povertyalleviation in this study suggests that the ultra-poor are notpoor because they are unwilling, or unfit to work similar jobs astheir wealthier neighbours. Instead, a core research finding wasthat the ultra-poor face a myriad of barriers, many stemmingfrom their initially low levels of wealth and human capital, thatprevent them from independently accessing the capital and skillsthey need to work in the same occupations as wealthier women.Engaging in more productive self-employment also enables theultra-poor to better smooth their labour supply throughout theyear so that they work more regularly throughout the year thanthey were at baseline. This reduces the negative impacts ofincome shocks from irregular or seasonal work.Due to the programme the share of the households living belowthe extreme poverty line is reduced by 8 percentage points afterfour years. Data on consumption, expenditure and savings ofineligible households support the conclusion that gains to ultra-poor do not come at the expense of other households.the ultra-poor face a myriad of barriers, manystemming from their initially low levels of wealth andhuman capital, that prevent them from independentlyaccessing the capital and skills they need to work in thesame occupations as wealthier women ”As is illustrated below, pilot programmes based on BRAC’smodel have been adapted and tested in six other countries, withhighly promising results. Positive impacts on the earnings andwelfare of ultra-poor households suggest that the programmecan be scaled up and replicated in other contexts and by otherimplementing organisations. The programme is also rapidlyattracting the attention of governments. If it can be integrated20/06/2017 Tackling extreme poverty: In conversation with Robin Burgess - IGChttp://www.theigc.org/blog/tackling-extreme-poverty-in-conversation-with-robin-burgess/ 5/5into the social protection programmes of governments acrossthe developing world, this programme has the potentialto contribute to achieving the first Sustainable DevelopmentGoal target – eradicating extreme poverty by 2030.Further research is still needed for us to determine exactlywhich programme components were the most effective atreducing poverty and how different components affecteddifferent participant groups. Overall, the success of theprogramme suggests that approaches that combined asset andskills transfers have the potential to transform the economiclives of the millions that currently live in extreme poverty.[1] All monetary values are reported in 2007 USD. Tackling Extreme Poverty: Transforming the Lives of the …

Tackling extreme poverty: in conversation with Robin Burgess

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