COVID-19 vs. UPG: Evidence From the 2007 Cohort in Bangladesh

Abstract

The COVID-19 pandemic has had far-reaching economic consequences beyond the spread of the disease itself, leading to a huge increase in poverty around the world. While most people have been affected by the disruption in social and economic activities, the poorest and the most vulnerable households in low income countries have experienced the hardest hit. According to the World Bank (2021), COVID-19 pushed between 119 and 124 million people into extreme poverty in 2020 and 154 million by 2021, the largest share (about 50%) of whom resides in South Asia. The effect of COVID-19 on extreme poverty is two-pronged—the pandemic made it more difficult for the extreme poor to come out of the poverty trap while pushing some of the vulnerable non-poor below the extreme poverty line. This is particularly pronounced in countries like Bangladesh, where an additional 22.9% of the population fell below the poverty line (Rahman et al., 2020).

In normal condition, BRAC’s flagship graduation approach aiming to alleviate poverty was proven to be highly successful at giving the poorest women in some of the poorest areas of Bangladesh the tools to escape the poverty trap (Balboni et al., 2021; Bandiera et al., 2017). Pilots of the UPG program have shown that its effectiveness can be replicated in diverse settings (Banerjee et al., 2015; Banerjee et al., 2018). The question we tackle here is whether these improvements are robust to systemic shocks such as COVID-19. Our paper investigates the impact of the pandemic on the 2007 cohort of beneficiaries of BRAC’s Ultra-Poor Graduation (UPG) program in rural areas of Bangladesh.