Poor areas, or only poor people?
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 householdattributes. Using survey data for Bangladesh, the authors find significant and sizable 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 anti-poverty programs targeted to poor areas even in an economy with few obvious impediments to mobility.
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