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How do the poor cope with hardships when mutual assistance is unavailable?

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  • Masahiro Shoji

    ()
    (University of Tokyo)

Abstract

This paper investigates how risk coping strategies differ between idiosyncratic and covariate income shocks using evidence from a nation-wide flood in Bangladesh. It is found that availability of coping strategies significantly depends on the covariate-idiosyncratic characteristic of shocks. The main strategies for idiosyncratic and moderate covariate shocks are interest-free informal credit and additional labor supply for fishing, but they are not utilized to cope with the severe covariate shocks. Instead, people must resort to borrowing with high interest as a last resort.

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File URL: http://www.accessecon.com/pubs/EB/2008/Volume15/EB-08O10015A.pdf
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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 15 (2008)
Issue (Month): 13 ()
Pages: 1-17

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Handle: RePEc:ebl:ecbull:eb-08o10015

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Keywords: South Asia;

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References

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  1. Kochar, Anjini, 1995. "Explaining Household Vulnerability to Idiosyncratic Income Shocks," American Economic Review, American Economic Association, American Economic Association, vol. 85(2), pages 159-64, May.
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  14. Fafchamps, Marcel & Udry, Christopher & Czukas, Katherine, 1998. "Drought and saving in West Africa: are livestock a buffer stock?," Journal of Development Economics, Elsevier, Elsevier, vol. 55(2), pages 273-305, April.
  15. Martin Ravallion & Shubham Chaudhuri, 1997. "Risk and Insurance in Village India: Comment," Econometrica, Econometric Society, Econometric Society, vol. 65(1), pages 171-184, January.
  16. Shahidur R. Khandker, 2007. "Coping with flood: role of institutions in Bangladesh," Agricultural Economics, International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 36(2), pages 169-180, 03.
  17. Ersado, Lire & Alderman, Harold & Alwang, Jeffrey, 2003. "Changes in Consumption and Saving Behavior before and after Economic Shocks: Evidence from Zimbabwe," Economic Development and Cultural Change, University of Chicago Press, University of Chicago Press, vol. 52(1), pages 187-215, October.
  18. Udry, Christopher, 1994. "Risk and Insurance in a Rural Credit Market: An Empirical Investigation in Northern Nigeria," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 61(3), pages 495-526, July.
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