Does poverty continue due to differences in ability or limited access to opportunities?
There are two broad competing views as to why the poor engage in low-earning occupations. One theory argues that differences in individual traits best explain the persistence of poverty. By contrast, the other theory emphasises limited access to opportunity, which gives rise to poverty traps. In this VoxDev video, Clare Balboni discusses an experiment assessing the impact of a large asset transfer programme in Bangladesh. Fascinatingly, the researchers find that the poor are held back because of a lack of access to capital, highlighting the presence of a poverty trap. This emphasises the importance of 'big push' policies in poverty reduction.
Read “Why do people stay poor?” by Clare Balboni, Oriana Bandiera, Robin Burgess, Maitreesh Ghatak and Anton Heil here.