Instead of targeting poor areas, should poverty programs target households with personal attributes that foster poverty, no matter where they live? Maybe not, these results suggest.
Instead of targeting poor areas, should poverty programs target households with personal attributes that foster poverty, no matter where they live?
Possibly not. There may be "hidden" constraints on mobility, or location may reveal otherwise hidden household attributes.
Using survey data for Bangladesh, Ravallion and Wodon find significant and sizeable geographic effects on living standards, after controlling for a wide range of nongeographic characteristics of households, as would typically be observable to policymakers.
The geographic effects are reasonably stable over time, robust to testable sources of bias, and consistent with observed migration patterns.
Poor areas are not poor just because households with readily observable attributes that foster poverty are geographically concentrated. There appear to be sizable spatial differences in the returns to given household characteristics.
Their results reinforce the case for antipoverty programs targeted to poor areas even in an economy with few obvious impediments to mobility.
This paper- a product of the Development Research Group-is part of a larger effort in the group to better inform antipoverty policies in developing countries. The study was funded by the Bank's Research Support Budget under research project "Policies for Poor Areas" (RPO 678-69).