reduction during 2000‐2005 was one of the highest in South Asia region for comparable periods. Poverty reduction was driven by robust GDP growth, which averaged above 5% annually during 2000‐05, along with stable relative inequality (the Gini of per capita consumption remained unchanged at 0.31 since mid‐1990s). While all sectors – agriculture, industry and services – are expanding, agricultural growth has been lagging behind that of other sectors, with the result that the contribution of agriculture to GDP fell from around 30% in the beginning of 1990s to just above 20% in 2005.

**Poverty reduction and the labor market** . Poverty reduction between 2000 and 2005 was linked to significant transformations in the labor market and rapid increases in remittances. Economic growth, driven mainly by factor accumulation in the private sector and rapid growth of the export sector, led to wage growth and enhanced labor productivity. Between 2000 and 2005, the share of agriculture in total employment declined – agricultural employment grew at 0.7 percent per year compared to 5 and 2.8 percent for services and manufacturing respectively. There was a movement away from low productivity jobs in agriculture to more productive jobs in the nonfarm private sector, particularly in urban areas. These trends are consistent with the shrinking share of agriculture in GDP while the share of services and industry was increasing.

Increasing flow of remittances (20% growth annually during 2000‐2005) was another key factor contributing to poverty reduction.<sup>16</sup> Government statistics on documented migration estimate that more than 3.7 million Bangladeshi have emigrated during the past 30 years and about 3 million – or 6% of the in‐country economically active population – were estimated to be living abroad in 2005.

Notwithstanding the progress, however, Bangladesh had an estimated 56 million people in poverty in 2005 and wide disparities across income and occupational groups, gender, and regions. Poverty was most prevalent among daily agricultural wage workers and subsistence farmers while the better‐off tended to be engaged in salaried employment or nonfarm self‐employment. The likelihood of poverty was also higher when a household had a larger number of dependents and low levels of education, and did not receive remittances. The poverty rate in 2005 among households receiving remittances from abroad was 17% compared to 42% among the rest.

**Regional differences in poverty reduction.** Underlying the national poverty story were vast differences between regions. Dhaka, Chittagong, and Sylhet divisions in the eastern part of the country experienced rapid poverty reduction between 2000 and 2005. Dhaka and Chittagong divisions, with just over half the country’s population in 2000, contributed nearly 80% of the reduction in national poverty during this period.  In the West, meanwhile, gains were much smaller for Rajshahi and nonexistent for Barisal and Khulna. As a result, in 2005, the poverty rate was between 30% and 35% in Dhaka, Chittagong and Sylhet divisions, and more than 45% in Khulna, Barisal and Rajshahi (more than 50% in Barisal and Rajshahi).

> 16 Equally important were some of the forces that have emerged from social transformations occurring over time. A fall in the number of dependents in a household, linked to past reductions in fertility, has been an important contributor in raising per capita incomes, as has been increases in labor force participation and educational attainment, particularly among women.

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