Author: Kristel D. Buysse
Publisher:
ISBN:
Category :
Languages : en
Pages : 248

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Author: Matthieu Delpierre
Publisher:
ISBN:
Category :
Languages : en
Pages : 36

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Empirical evidence on developing countries highlights that poor farm-households are less keen to adopt high risk/high return technologies than rich households. Yet, they tend to be more vulnerable to income shocks than the rich. This paper develops a model of informal risk-sharing with endogenous risk-taking which provides a rationale for these observations. In our framework, informal risk-sharing is incomplete due to risk externalities, which leads to moral hazard. We compare the first best and second best to a decentralized bargaining process, where the lack of coordination amplifies moral hazard. The analysis of group composition yields counterintuitive results. First, if groups are homogeneous, poor groups share less risks than rich groups even though the rich take more risks. Second, the insurance level of rich households decreases in the presence of poor households, potentially making them reluctant to share risk with poorer households.

Author: Stefan Dercon
Publisher:
ISBN:
Category : Households
Languages : en
Pages : 52

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Author: Gianluca Femminis
Publisher:
ISBN:
Category :
Languages : en
Pages : 15

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Author: Wanchuan Lin
Publisher:
ISBN:
Category :
Languages : en
Pages : 65

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This paper investigates the crowding-out effect of formal insurance on informal risk-sharing arrangements via theory and laboratory experiment. Our model and simulation predict that the crowding out of private transfers is often more than one-for-one and will reduce the total risk coverage. Furthermore, the existence of a moderate degree of altruism exaggerates the crowding-out effect, especially when there is an ex-ante income inequality. These predictions are mostly supported by the laboratory experiment, except that the crowding-out effect is not more than one-for-one, and hence the total risk coverage is not significantly reduced by formal insurance.

Author: Salvador Ortigueira
Publisher:
ISBN:
Category : Income
Languages : en
Pages : 51

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While it is recognized that the family is primarily an institution for risk sharing, little is known about the quantitative effects of this informal source of insurance on savings and labor supply. In this paper, we present a model where workers (females and males) are subject to idiosyncratic employment risk and where capital markets are incomplete. A household is formed by a female and a male, who make collective decisions on consumption, savings and labor supplies. In a calibrated version of our model, we find that precautionary savings are only 55% of those generated by a similar economy that lacks access to insurance from the family. We also find that intra-household risk sharing has its largest impact among wealthpoor households. While the wealth-rich use mainly savings to smooth consumption across unemployment spells, wealth-poor households rely on spousal labor supply. For instance, in the group of households with wealth less than two months worth of income, average hours worked by wives of unemployed husbands are 8% higher than those worked by wives of employed husbands. This response in wives' hours makes up 9% of lost family income. We also find crowding out effects of public unemployment insurance that are comparable to those estimated from the data.

Author: Alexander Sarris
Publisher: Food & Agriculture Org.
ISBN: 9789251037850
Category : Business & Economics
Languages : en
Pages : 148

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Author: Marcel Fafchamps
Publisher: Food & Agriculture Org.
ISBN: 9789251043714
Category : Social Science
Languages : en
Pages : 156

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All men and women are subject to risk: illness, accident, death. Some shocks affect their ability to feed and support themselves properly, either temporarily: unemployment, crop failure, and loss of property; or permanently: disability, and skill obsolescence.This report summarises what is known and also what is not known about the sources of risk faced by the rural poor and their coping strategies. It examines the impact of risk and risk-coping strategies on development and the way in which governments and international organisations can assist in dealing with risk and overcoming poverty.

Author: AKESSANDRA GUARIGLIA
Publisher:
ISBN:
Category :
Languages : en
Pages : 25

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Author:
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 476

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