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Estimating Households Vulnerability to Idiosyncratic and Covariate Shocks: A Novel Method Applied in Madagascar

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  • Günther, Isabel
  • Harttgen, Kenneth

Abstract

Summary Households in developing countries are frequently hit by severe idiosyncratic and covariate shocks leading to high consumption volatility. A household's currently observed poverty status might therefore not be a good indicator of the household's general vulnerability to poverty. In the recent years, there has been an emerging literature on the concept and empirical analysis of vulnerability. But because of strong data requirements for vulnerability analysis and limited availability of panel and shock data for developing countries, static poverty analysis still dominates empirical vulnerability studies. In this paper, we propose a simple method to empirically assess the impact of idiosyncratic and covariate shocks on households' vulnerability, which can be applied in a wide context as it relies on more commonly available cross-sectional or short panel data. We empirically illustrate our approach for Madagascar. We show that covariate shocks have a relatively higher impact on rural households, whereas idiosyncratic shocks have a relatively higher impact on urban households' vulnerability.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 37 (2009)
Issue (Month): 7 (July)
Pages: 1222-1234

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Handle: RePEc:eee:wdevel:v:37:y:2009:i:7:p:1222-1234

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Web page: http://www.elsevier.com/locate/worlddev

Related research

Keywords: vulnerability idiosyncratic and covariate shocks multilevel modeling Madagascar;

References

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Citations

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Cited by:
  1. Bali Swain, Ranjula & Floro, Maria, 2010. "Reducing Vulnerability through Microfinance: Evidence from Indian Self Help Group Program," Working Paper Series 2010:23, Uppsala University, Department of Economics.
  2. Alary, Véronique & Corniaux, Christian & Gautier, Denis, 2011. "Livestock's Contribution to Poverty Alleviation: How to Measure It?," World Development, Elsevier, vol. 39(9), pages 1638-1648, September.
  3. Balgah, Roland Azibo & Buchenrieder, Gertrud, 2011. "Effects of Natural Shocks on Risk Behavior. Experimental Evidence from Cameroon," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114215, European Association of Agricultural Economists.
  4. Katja Landau & Stephan Klasen & Walter Zucchini, 2012. "Measuring Vulnerability to Poverty Using Long-Term Panel Data," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 118, Courant Research Centre PEG.
  5. Eleonora Nillesen & Philip Verwimp, 2010. "A Phoenix in Flames? Portfolio Choice and Violence in Civil War in Rural Burundi," Research Working Papers 25, MICROCON - A Micro Level Analysis of Violent Conflict.
  6. Eozenou, Patrick & Madani, Dorsati & Swinkels, Rob, 2013. "Poverty, malnutrition and vulnerability in Mali," Policy Research Working Paper Series 6561, The World Bank.
  7. Echevin, Damien, 2011. "Vulnerability and livelihoods before and after the Haiti earthquake," Policy Research Working Paper Series 5850, The World Bank.
  8. Emiliano Magrini & Pierluigi Montalbano, 2012. "Trade openness and vulnerability to poverty: Vietnam in the long-run (1992-2008)," Working Paper Series 3512, Department of Economics, University of Sussex.
  9. Nillesen, Eleonora & Verwim, Philip, 2010. "A Phoenix in Flames? Portfolio Choice and Violence in Civil War in Rural Burundi," Working Paper Series wp2010-44, World Institute for Development Economic Research (UNU-WIDER).
  10. Ranjula Bali Swain & Maria S. Floro, 2010. "Reducing Vulnerability through Microfinance: Assessing the Impact of Self-Help Groups in India," Working Papers 2010-19, American University, Department of Economics.
  11. Balgah, Roland Azibo & Buchenrieder, Gertrud, 0. "Natural Shocks and Risk Behavior: Experimental Evidence from Cameroon," Quarterly Journal of International Agriculture, Humboldt-Universität zu Berlin, vol. 50.
  12. Chiwaula, Levison & Waibel, Hermann, 2011. "Does seasonal vulnerability to poverty matter? A case study from the Hadejia-Nguru Wetlands in Nigeria," Proceedings of the German Development Economics Conference, Berlin 2011 19, Verein für Socialpolitik, Research Committee Development Economics.
  13. Witt, Rudolf & Waibel, Hermann, 2009. "Lower Partial Moments as a measure of vulnerability to poverty in Cameroon," Hannover Economic Papers (HEP) dp-434, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  14. Echevin, Damien, 2011. "Characterizing poverty and vulnerability in rural Haiti: a multilevel decomposition approach," MPRA Paper 35659, University Library of Munich, Germany.

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