Assets and poverty traps in rural Bangladesh

The distinguishing feature of chronic poverty is extended duration in absolute poverty. Therefore, chronically poor people always, or usually, live below a poverty line, which is normally defined in terms of a money indicator (e.g. consumption, income, etc.), but could also be defined in terms of wider or subjective aspects of deprivation. This is different from the transitorily poor, who move in and out of poverty, or only occasionally fall below the poverty line. Assets and poverty traps in rural Bangladesh 2 Abstract This paper applies Carter and Barrett's theory of assets poverty traps to a unique longitudinal survey from rural Bangladesh. Non-parametric and parametric methods are used to examine the shape of the dynamic asset frontier, the number of equilibria, and whether land and non-land assets stock converge to such equilibria. We find evidence for concavity of the dynamic asset frontier but no evidence for multiple equilibria in the case of both land and non-land assets. It is hypothesised that the existence of well-functioning markets for labour and capital and the absence of discrete differences in livelihood strategies in rural Bangladesh, and Asia more generally, help to explain the contrast between our results and those for several African countries