View metadata, citation and similar papers at core.ac.uk brought to you by CORE
provided by International Institute for Science, Technology and Education (IISTE): E-Journals
Journal of Economics and Sustainable Development www.iiste.org
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.8, No.20, 2017
The Role of Education in Poverty Alleviation: Evidence from
Bangladesh
Sacchidanand Majumder1, 2* Dr. Soma Chowdhury Biswas3
1.M. Phil., Department of Statistics, University of Chittagong, Bangladesh
2.Monitoring Specialist, Dhaka Ahsania Mission, Dhaka, Bangladesh
3.Professor, Department of Statistics, University of Chittagong, Bangladesh
Abstract
Education provides a foundation for eradicating poverty and fostering economic development. The objective of
this study is to investigate the influences of education and other demographic, economic, and social factors on
poverty of household in Bangladesh through an analysis of data from the Household Income and Expenditure
Survey (HIES) 2010 conducted by Bangladesh Bureau of Statistics (BBS). A total of 12,240 households are
considered for analyzing the status of household’s poverty. CBN method is employed for estimating poverty of
household. After adjustment in a multivariate logistic regression model an increase in educational level of
household’s head had a strong association with the probability of a household being non-poor. Increased the
number of literate member or presence of a graduate or higher educated member in household, the probability of
household being poor is decreased. Increasing investment in education can lead a household from being poor to
non-poor. The study results also highlights that rural households are poorer than urban households and
household size; age, sex and employment status of household’s head; construction materials of walls and roofs,
source of drinking water all have significant impact on household’s poverty level.
Keywords: Education, Poverty, Household, CBN Method, Logistic regression analysis, Bangladesh.
Introduction
Poverty is a multidimensional concept: it is not only the lack of financial resources, but also, the lack of
capability to function effectively in society. Inadequate education or income, poor health, insecurity, low self-
esteem, sense of powerlessness or the absence of rights such as freedom of speech are different dimensions of
poverty that must be taken into account when designing poverty reduction measures (Sen 1992). A study by
United Nations Development Program (UNDP) revealed that human poverty not only stands for income poverty:
it is the lack of access to opportunities and alternatives for living an endurable life. Lack of education is one such
significant opportunity which reflects the poverty of education. Therefore, in a cyclical overview, educational
poverty translates into an important measure of human poverty (Espen, 2009).
Education provides a foundation for eradicating poverty and fostering economic development. Education is
important in reducing poverty and also increasing the wealth of a nation (UNESCO, 2001). An increase in the
educational level of the head of the household significantly reduces the chances of the household being poor
(Qureshi and Arif, 2001). Moreover, an increase in the schooling of household heads not only has a positive
impact on their productivity and earnings but also enhance the productivity of other members of the household
perhaps through persuading them to be educated and/or skill-oriented (Abuka, et. al 2007). The study conducted
by Shirazi (1994 as cited in Janjua & Kamal, 2011) reveals that when the education levels for household heads
rises, household poverty risk weakens.
An increase in the educational level of the head of the household significantly reduces the chances of the
household being poor (Nasir and Nazli, 2000). Moreover, an increase in the schooling of household heads not
only has a positive impact on their productivity and earnings but also enhance the productivity of other members
of the household perhaps through persuading them to be educated and/or skill-oriented (Qureshi and Arif, 2001)
Appleton (1997) argues that each year in primary school refers to a 2.5% decrease in poverty risk and that
almost doubles early secondary education levels. While lower education may lead to higher levels of poverty,
poverty may also result in lower levels of education.
There is a positive correlation between education level and income earning abilities. Increased levels of
education thus increase economic opportunities and growth. Education also increases social benefits that
improve economic development and the conditions of the poor (Haughton and Khandker 2009). Education
contributes to poverty reduction by increasing the value of efficiency of the labour force and thus enhances
economic growth (Julius et. al, 2009). The higher level of education not only increases the sources of earning or
wages but also improves the income level. In the same way, according to Sackey (2005) education has a crucial
role in the wellbeing of individual/ household.
Education is regarded as a means of escaping from poverty (Becker, 1993). Education, primary education in
particular, is increasingly perceived as playing a pivotal role in poverty alleviation (Jimenez, 1995; Lipton and
Ravallion, 1995). Human capital theory, more specifically the rates of return on education, is used as the
theoretical foundation for emphasizing the importance of primary and girls’ schooling in developing countries.
151
, Journal of Economics and Sustainable Development www.iiste.org
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.8, No.20, 2017
This theory assumes that education can both enhance an individual’s productivity and thus improve their
earnings and contribute to the economic growth of the country as a whole (Shultz, 1963; Becker, 1993).
Primary education is the initial threshold of human capital but secondary and higher education, and
investment in science and technology will give rise to acceleration and sustenance in economic growth and
development. The simple regression secondary and higher education is inversely related with poverty, therefore
secondary and higher education is important in the inverse relation of education and poverty apart from primary
education Tilak, (2005). It has been seen that the likelihood of being poor is higher even for the lower level of
education Okojie (2002).
Evidence suggests that cognitive skills have large economic effects on individual earnings and on national
growth (Hanushek and Woessmann 2007) and that workers' productivity depends both on years of education and
what is learned at school (Heckman, Layne-Farrar, and Todd 1995; Murnane, Willett, and Levy 1995).
Mursa (2007) examined the positive relationship between degree of education and level of employment of
working force. It was found that unemployment is due to less education, less aptitudes, knowledge and
qualification. He stated that education has very significant economic value due to the complex productive
process. He concluded that less qualified person faces unemployment because the companies demand a worker
with high techniques and well education. Better education provides better opportunities, increases employment
and decreases unemployment risk (Mursa, 2007).
Higher educational degrees act as a signal of diligence to employers, and increase access to a greater
number of available jobs. By contrast, lower skilled individuals are less likely to find employment and if they do,
they are usually the first to be dismissed during economic slowdowns. The probability of falling into poverty is
thus higher for lower educated individuals (Schiller 2008). It is important to note that the emergence of
globalisation has increased competition in the labour market, making lower skilled labour ever more replaceable
and therefore investment in higher levels of education essential (Bonal 2007, Tarabini 2010).
Some studies have shown that education is strongly associated with poverty reduction in Bangladesh (see
for example, Asadullah 2005; Asadullah and Rahman 2005; Al-Samarrai 2007). For these reasons, education is a
key component of the government’s attempts to accelerate poverty reduction (GOB 2005). In Bangladesh,
poverty levels fall as the educational attainment of people rises. The tendency of reducing poverty among the
more educated persons have occurred at an accelerated pace than those having no or little education.
Additionally, it is found that the rate of reduction in the incidence of poverty among the illiterate has reduced
from 63.1 percent in 2000 to 42.8 percent in 2010 with an annual decrease rate of 3.2 percent at the national
level (Mustafizur, 2012).
A district-wide analysis of education and the incidence of poverty gives a more clear and realistic picture
regarding this relationship. The correlation coefficient between literacy rate (7 years and above in 2001) and
poverty incidences (2003) has been found to be -0.40, which implies that a higher level of educational attainment
certainly reduces the poverty incidence in a region. As a result, it can be said that education has a higher impact
on reducing poverty at the regional level in Bangladesh; nevertheless, there are other contributing factors besides
poverty that affect the level of regional education (Khan and Islam. 2015).
Education and poverty are inversely related. The higher the level of education of the population, lesser will
be the number of poor persons because education imparts knowledge and skills which is helpful in higher wages.
The direct effect of education on poverty reduction is through increasing the earnings/income or ages. The
indirect effect of education on poverty is important with respect to ‘human poverty’ because as education
improves the income, the achievement of basic necessities becomes easier and raises the living standard which
surely means the fall in human poverty. The education indirectly helps in the fulfillment of basic needs like
water and sanitation, utilization of health facilities, shelter, and it also affects the women’s behavior in fertility
decisions and family planning. (Awan et al., 2011)
Literature reviewed above enables us to understand the impacts of Education in Poverty Reduction. And
according to different scholars who analyzed the empirics of different countries, it can be proved that education
causes to decrease in poverty. The objective of the study is to investigate the influences of some education,
demographic, economic, and social factors on poverty of household in Bangladesh.
Methodology
Source of Data
The data utilized for the present study are picked out from the Household Income and Expenditure Survey (HIES)
2010, which is a nationally representative survey conducted by Bangladesh Bureau of Statistics (BBS). A two
stage stratified random sampling technique was followed in drawing sample of HIES 2010 under the framework
of Integrated Multipurpose Sample (IMPS) design developed on the basis of the sampling frame based on the
Population and Housing Census 2001. The IMPS design consisted of 1000 Primary Sampling Units (PSUs)
throughout the country. There were 640 rural and 360 urban PSUs in the sample. The PSU was defined as
contiguous two of more enumeration areas (EA) used in Population and Housing Census 2001. Each PSU
152
provided by International Institute for Science, Technology and Education (IISTE): E-Journals
Journal of Economics and Sustainable Development www.iiste.org
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.8, No.20, 2017
The Role of Education in Poverty Alleviation: Evidence from
Bangladesh
Sacchidanand Majumder1, 2* Dr. Soma Chowdhury Biswas3
1.M. Phil., Department of Statistics, University of Chittagong, Bangladesh
2.Monitoring Specialist, Dhaka Ahsania Mission, Dhaka, Bangladesh
3.Professor, Department of Statistics, University of Chittagong, Bangladesh
Abstract
Education provides a foundation for eradicating poverty and fostering economic development. The objective of
this study is to investigate the influences of education and other demographic, economic, and social factors on
poverty of household in Bangladesh through an analysis of data from the Household Income and Expenditure
Survey (HIES) 2010 conducted by Bangladesh Bureau of Statistics (BBS). A total of 12,240 households are
considered for analyzing the status of household’s poverty. CBN method is employed for estimating poverty of
household. After adjustment in a multivariate logistic regression model an increase in educational level of
household’s head had a strong association with the probability of a household being non-poor. Increased the
number of literate member or presence of a graduate or higher educated member in household, the probability of
household being poor is decreased. Increasing investment in education can lead a household from being poor to
non-poor. The study results also highlights that rural households are poorer than urban households and
household size; age, sex and employment status of household’s head; construction materials of walls and roofs,
source of drinking water all have significant impact on household’s poverty level.
Keywords: Education, Poverty, Household, CBN Method, Logistic regression analysis, Bangladesh.
Introduction
Poverty is a multidimensional concept: it is not only the lack of financial resources, but also, the lack of
capability to function effectively in society. Inadequate education or income, poor health, insecurity, low self-
esteem, sense of powerlessness or the absence of rights such as freedom of speech are different dimensions of
poverty that must be taken into account when designing poverty reduction measures (Sen 1992). A study by
United Nations Development Program (UNDP) revealed that human poverty not only stands for income poverty:
it is the lack of access to opportunities and alternatives for living an endurable life. Lack of education is one such
significant opportunity which reflects the poverty of education. Therefore, in a cyclical overview, educational
poverty translates into an important measure of human poverty (Espen, 2009).
Education provides a foundation for eradicating poverty and fostering economic development. Education is
important in reducing poverty and also increasing the wealth of a nation (UNESCO, 2001). An increase in the
educational level of the head of the household significantly reduces the chances of the household being poor
(Qureshi and Arif, 2001). Moreover, an increase in the schooling of household heads not only has a positive
impact on their productivity and earnings but also enhance the productivity of other members of the household
perhaps through persuading them to be educated and/or skill-oriented (Abuka, et. al 2007). The study conducted
by Shirazi (1994 as cited in Janjua & Kamal, 2011) reveals that when the education levels for household heads
rises, household poverty risk weakens.
An increase in the educational level of the head of the household significantly reduces the chances of the
household being poor (Nasir and Nazli, 2000). Moreover, an increase in the schooling of household heads not
only has a positive impact on their productivity and earnings but also enhance the productivity of other members
of the household perhaps through persuading them to be educated and/or skill-oriented (Qureshi and Arif, 2001)
Appleton (1997) argues that each year in primary school refers to a 2.5% decrease in poverty risk and that
almost doubles early secondary education levels. While lower education may lead to higher levels of poverty,
poverty may also result in lower levels of education.
There is a positive correlation between education level and income earning abilities. Increased levels of
education thus increase economic opportunities and growth. Education also increases social benefits that
improve economic development and the conditions of the poor (Haughton and Khandker 2009). Education
contributes to poverty reduction by increasing the value of efficiency of the labour force and thus enhances
economic growth (Julius et. al, 2009). The higher level of education not only increases the sources of earning or
wages but also improves the income level. In the same way, according to Sackey (2005) education has a crucial
role in the wellbeing of individual/ household.
Education is regarded as a means of escaping from poverty (Becker, 1993). Education, primary education in
particular, is increasingly perceived as playing a pivotal role in poverty alleviation (Jimenez, 1995; Lipton and
Ravallion, 1995). Human capital theory, more specifically the rates of return on education, is used as the
theoretical foundation for emphasizing the importance of primary and girls’ schooling in developing countries.
151
, Journal of Economics and Sustainable Development www.iiste.org
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.8, No.20, 2017
This theory assumes that education can both enhance an individual’s productivity and thus improve their
earnings and contribute to the economic growth of the country as a whole (Shultz, 1963; Becker, 1993).
Primary education is the initial threshold of human capital but secondary and higher education, and
investment in science and technology will give rise to acceleration and sustenance in economic growth and
development. The simple regression secondary and higher education is inversely related with poverty, therefore
secondary and higher education is important in the inverse relation of education and poverty apart from primary
education Tilak, (2005). It has been seen that the likelihood of being poor is higher even for the lower level of
education Okojie (2002).
Evidence suggests that cognitive skills have large economic effects on individual earnings and on national
growth (Hanushek and Woessmann 2007) and that workers' productivity depends both on years of education and
what is learned at school (Heckman, Layne-Farrar, and Todd 1995; Murnane, Willett, and Levy 1995).
Mursa (2007) examined the positive relationship between degree of education and level of employment of
working force. It was found that unemployment is due to less education, less aptitudes, knowledge and
qualification. He stated that education has very significant economic value due to the complex productive
process. He concluded that less qualified person faces unemployment because the companies demand a worker
with high techniques and well education. Better education provides better opportunities, increases employment
and decreases unemployment risk (Mursa, 2007).
Higher educational degrees act as a signal of diligence to employers, and increase access to a greater
number of available jobs. By contrast, lower skilled individuals are less likely to find employment and if they do,
they are usually the first to be dismissed during economic slowdowns. The probability of falling into poverty is
thus higher for lower educated individuals (Schiller 2008). It is important to note that the emergence of
globalisation has increased competition in the labour market, making lower skilled labour ever more replaceable
and therefore investment in higher levels of education essential (Bonal 2007, Tarabini 2010).
Some studies have shown that education is strongly associated with poverty reduction in Bangladesh (see
for example, Asadullah 2005; Asadullah and Rahman 2005; Al-Samarrai 2007). For these reasons, education is a
key component of the government’s attempts to accelerate poverty reduction (GOB 2005). In Bangladesh,
poverty levels fall as the educational attainment of people rises. The tendency of reducing poverty among the
more educated persons have occurred at an accelerated pace than those having no or little education.
Additionally, it is found that the rate of reduction in the incidence of poverty among the illiterate has reduced
from 63.1 percent in 2000 to 42.8 percent in 2010 with an annual decrease rate of 3.2 percent at the national
level (Mustafizur, 2012).
A district-wide analysis of education and the incidence of poverty gives a more clear and realistic picture
regarding this relationship. The correlation coefficient between literacy rate (7 years and above in 2001) and
poverty incidences (2003) has been found to be -0.40, which implies that a higher level of educational attainment
certainly reduces the poverty incidence in a region. As a result, it can be said that education has a higher impact
on reducing poverty at the regional level in Bangladesh; nevertheless, there are other contributing factors besides
poverty that affect the level of regional education (Khan and Islam. 2015).
Education and poverty are inversely related. The higher the level of education of the population, lesser will
be the number of poor persons because education imparts knowledge and skills which is helpful in higher wages.
The direct effect of education on poverty reduction is through increasing the earnings/income or ages. The
indirect effect of education on poverty is important with respect to ‘human poverty’ because as education
improves the income, the achievement of basic necessities becomes easier and raises the living standard which
surely means the fall in human poverty. The education indirectly helps in the fulfillment of basic needs like
water and sanitation, utilization of health facilities, shelter, and it also affects the women’s behavior in fertility
decisions and family planning. (Awan et al., 2011)
Literature reviewed above enables us to understand the impacts of Education in Poverty Reduction. And
according to different scholars who analyzed the empirics of different countries, it can be proved that education
causes to decrease in poverty. The objective of the study is to investigate the influences of some education,
demographic, economic, and social factors on poverty of household in Bangladesh.
Methodology
Source of Data
The data utilized for the present study are picked out from the Household Income and Expenditure Survey (HIES)
2010, which is a nationally representative survey conducted by Bangladesh Bureau of Statistics (BBS). A two
stage stratified random sampling technique was followed in drawing sample of HIES 2010 under the framework
of Integrated Multipurpose Sample (IMPS) design developed on the basis of the sampling frame based on the
Population and Housing Census 2001. The IMPS design consisted of 1000 Primary Sampling Units (PSUs)
throughout the country. There were 640 rural and 360 urban PSUs in the sample. The PSU was defined as
contiguous two of more enumeration areas (EA) used in Population and Housing Census 2001. Each PSU
152
