A good mix against ultra-poverty? Evidence from a randomized controlled trial (RCT) in Bangladesh

Abstract

Existing evidence shows that programs that provide grants to productive assets along with training to very poor women increase labor supply, earnings, and consumption. In contrast, evidence on the effect of microcredit on these outcomes is mixed. In this paper, we examine the effect of a hybrid of the two approaches—credit and grant—on the livelihoods of the ultra-poor in Bangladesh. A randomized evaluation of the hybrid intervention shows that it increases labor supply of working-age women, household income, productive assets, savings, and consumption expenditures. The benefit–cost ratio of the intervention is estimated to be 8.47.