Inequality in Rural Bangladesh in the 2000s: Trends and Causes

This paper has investigated the patterns of inequality that have emerged in rural Bangladesh in the decade of the 2000s. Two findings stand out clearly– distribution of income has become more unequal over the decade, and, somewhat surprisingly, distribution of consumption has remained more or less unchanged despite widening income inequality. The main analytical task of the paper was to search for the underlying causes responsible for these two apparently contradictory trends. The root of widening income inequality was found to lie in the unequalising effects of foreign remittance, and to a lesser extent, that of income from self-employment in non-agricultural activities. These two sources of income were also the driving force behind rapid growth of the rural economy. This poses a trade-off between growth and equity, which the policymakers need to resolve – for example, by making foreign migration more affordable to people of small means.