Can Basic Entrepreneureship Transform the Economic Lives of the Poor?

Asia

Bangladesh

Labour Market

Asset transfer

Bandiera O. et. al.

2013

Bandiera O. et. al., "Can Basic Entrepreneurship Transform the Economic Lives of the Poor?", IZA Discussion Paper 7386, May 2013.
View publication

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2013

Targeted Ultra-Poor (TUP) program

2002-today

The TUP program is designed to meet the needs of ultra poor households who are too poor to access the benefit from traditional development interventions such as microfinance.

The beneficiaries of the TUP program are women from the ultra-poor households in rural Bangladesh. In order to be selected a household has to satisfy the following inclusion criteria: (i) total land owned including homestead land does not exceed 10 decimals; (ii) there is no adult male income earner in the household; (iii) adult women in the household work outside the homestead; (iv) school-aged children have to work; and (v) the household has no productive assets. Eligible women must not be enrolled in microfinance organizations or in government anti-poverty programs.

The TUP program offers a list of possible business activities (livestock assets, small retail operations, and etc.) to eligible females. This transfer of assets can be accompanied by helpful training for the given activity. The program also provides a subsistence allowance to the beneficiary females in order to compensate them the short-term fall in earnings which occurs due to the occupational changes.

• Children’s work: Hours in wage employment; and hours in self-employment (average values by household)
• Education: no
• Age range: N.A.

Difference-in-difference approach

Sample: Final sample contains 6,732 eligible (extreme poor) households and 16,297 households from other wealth classes.
Identification strategy: To identify the communities where the program operates, the Bangladesh Rehabilitation Assistance Committee (BRAC) central office first selects the most vulnerable districts in rural Bangladesh based on the food security maps of the World Food Program; and then BRAC employees from local branch offices within those districts select the poorest communities in their branch. Communities are then asked to rank all households into five wealth bins.
Survey instrument: The evaluation sample covers 1409 communities in 40 regions in Rural Bangladesh. Half of them were treated in 2007 and the rest kept as controls until 2011. The 2007 baseline sample contains 7,953 eligible females from 1,409 communities, and 19,012 households from higher wealth classes which were chosen randomly. Over four years, from 2007 to 2011, the attrition of eligible households was 13%.

Children from the beneficiary households work for more hours in self-employment than children from control group. There is no statistically significant effect of the TUP program on the wage employment of children.

Child Labour

Households

National

Children from the beneficiary households worked for more hours in self-employment than children from the control group in Bangladesh. No impact was identified for the wage employment of children.

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The paper demonstrates that sizable transfers of assets and skills enable the poorest women to shift from the agricultural labor to running small business. This shift leads to increase of 38% in their earnings.