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poverty traps

All for One and One for All? Why Networks Don’t Prevent Poverty Traps: Guest post by Arun Advani

This is the fourth in our series of posts by PhD students on the job market this year.
Giving livestock to poor households can increase their incomes substantially. This naturally raises the question: why were households not investing in such livestock before? One obvious answer is that they are poor – this means they can neither afford to invest themselves, nor get a loan from a bank (or microfinance organisation). But the puzzle is more subtle than that. When facing a crisis, even very poor households borrow informally, from a network of friends, family, and neighbours, to fund consumption. In addition, households in these networks collectively have the resources needed to invest in livestock. So the real question is: why don’t households pool resources to allow investment? What makes borrowing to invest so different from borrowing to smooth consumption?

Poverty reduction through large asset transfers: a look at the long run

Markus Goldstein's picture
Last year, Banerjee and coauthors published a paper in Science that showed the striking impacts of poverty graduation programs in 6 countries after three years.   This week, we get a new paper from Bandiera and coauthors that revisits one of the models of this type of program they wrote about in 2013 and looks not only at a wide range of benefits, but also at what happens in the longer run.  

What happens when large ruminants (and some training) meet poverty traps

Markus Goldstein's picture
Can we break poverty traps?   An interesting new paper by Oriana Bandiera, Robin Burgess, Narayan Das, Selim Gulesci, Imran Rasul, and Munshi Sulaiman adds to this emergent literature with a definitive “yes we can.”     Bandiera, et. al. evaluate a program run by the NGO BRAC which provides a significant infusion of capital, coupled with training, for Bangladeshi women.