Mobile Phone Ownership, Household Welfare, and Income Inequality in Bangladesh

Mobile phone has been widely adopted in developing countries. It may enhance opportunities for finding off-farm work which builds resilience of rural livelihoods. Existing studies show that mobile phone improves income. Beyond income, mobile phone can increase off-farm employment and reduce poverty. However, such effects have hardly been studied. To fill this gap, we investigate the linkage among mobile phone ownership, off-farm work, and household welfare, especially monetary and non-monetary aspects of poverty. Using instrumental variable approach, we find that mobile phone ownership increases household total income andper capita income while it alleviates poverty headcount, depth of poverty, and multidimensional poverty. The results also show that female-headed households and poorer households enjoy larger impact of mobile phone ownership on poverty alleviation and increase in income as well as smallholder farm households have more opportunities of off-farm employment. Another dimension of household welfare affected by the choice of income source is income inequality. The Gini decomposition of different income sources with propensity score matching indicates that the off-farm income results in an inequality-equalizing effect among the rural households owning mobile phones in Bangladesh, suggesting the off-farm income of rural households owning mobile phones improves the overall welfare of the rural society