Can a light-touch graduation model address persistent poverty? Evidence from Ethiopia

Households living in extreme poverty face a complex set of constraints that are difficult to escape. Existing resources often must go to meet immediate needs, leaving little or no money for investments with longer-term benefits; households may not own assets that could be used to generate a sustainable income stream, or have access to credit to purchase them. In addition, the high levels of stress often associated with poverty may limit people’s knowledge, attention, and/or psychosocial capabilities.

To address these complex challenges, layered poverty “graduation model” interventions that simultaneously address several barriers have shown promise in enabling households to increase their income and enhance their well-being along multiple dimensions (Banerjee et al. 2015, Bandiera et al. 2017). Such approaches encompass large asset transfers, regular monthly payments for consumption support, access to savings technologies, and regular training and household coaching. However, the effectiveness of such interventions at larger scales has not been widely explored, and given that they are intensive and center around asset transfers valued between $500 and $1000, there may be important trade-offs between program capacity and feasible scale.