Changing Sources of Household Income and Poverty Reduction in Rural Asia, 1985–2004

Using long-term household panel data in rural villages in the Philippines, Thailand, Bangladesh and Tamil Nadu (India), this paper attempts to describe the changing sources of household income and to identify major factors affecting the decline in poverty in rural Asia. We found that the most decisive factor directly responsible for poverty reduction is the increased income from rural non-farm sectors and urban labor markets. It is, however, important to emphasize that it was the rise in farm income associated with the Green Revolution that has enabled the farm households to invest in schooling of their children, who later found lucrative employment opportunities in the non-farm sector. 1 Corresponding author: Foundation for Advanced Studies on International Development, 7-22-1 Roppongi, Minato-ku, Tokyo 106-8677, Japan; Tel. +81-3-5413-6030; Fax +81-3-5413-0016; Email: [email protected] 2 Foundation for Advanced Studies on International Development, 7-22-1 Roppongi, Minato-ku, Tokyo 106-8677, Japan; Tel. +81-3-5413-6038; Fax +81-3-5413-0016; Email: [email protected]