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Consumption insurance between Japanese households

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  • Miki Kohara

Abstract

This paper examines the implication of the full insurance hypothesis and differences in its applicability across groups of households in Japan. Using a rare Japanese individual panel data set called the Japanese Panel Survey of Consumption, the paper first shows that the full insurance hypothesis is strongly rejected for the country as a whole. The paper further shows that the rich as well as the poor, and also college graduates as well as non-college graduates cannot insure their consumption against income shocks. In sharp contrast, urban residents can pool income shocks completely, whereas rural residents cannot. Rural residents suffer from income risks more seriously than urban residents in Japan.

Suggested Citation

  • Miki Kohara, 2001. "Consumption insurance between Japanese households," Applied Economics, Taylor & Francis Journals, vol. 33(6), pages 791-800.
    • Handle: RePEc:taf:applec:v:33:y:2001:i:6:p:791-800
    DOI: 10.1080/00036840121946
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    References listed on IDEAS

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    1. Mervyn A. King & Jonathan I. Leape, 1987. "Asset Accumulation, Information, and the Life Cycle," NBER Working Papers 2392, National Bureau of Economic Research, Inc.
    2. McCarthy, Jonathan, 1995. "Imperfect insurance and differing propensities to consume across households," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 301-327, November.
    3. Mace, Barbara J, 1991. "Full Insurance in the Presence of Aggregate Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 928-956, October.
    4. Hayashi, Fumio & Altonji, Joseph & Kotlikoff, Laurence, 1996. "Risk-Sharing between and within Families," Econometrica, Econometric Society, vol. 64(2), pages 261-294, March.
    5. Cochrane, John H, 1991. "A Simple Test of Consumption Insurance," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 957-976, October.
    6. Attanasio, Orazio & Davis, Steven J, 1996. "Relative Wage Movements and the Distribution of Consumption," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1227-1262, December.
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    Cited by:

    1. Okura Mahito & Kasuga Norihiro, 2007. "Financial Instability and Life Insurance Demand," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 2(1), pages 1-14, May.
    2. J. François Outreville, 2013. "The Relationship Between Insurance and Economic Development: 85 Empirical Papers for a Review of the Literature," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 16(1), pages 71-122, March.
    3. Cong Tam Trinh & Xuan Nguyen & Pasquale Sgro, 2021. "Culture and the demand for non‐life insurance: Empirical evidences from middle‐income and high‐income economies," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 29(3), pages 431-458, July.
    4. HORI Masahiro & SHIMIZUTANI Satoshi, 2003. "Asset Holding and Consumption: Evidence from Japanese Panel Data in the 1990s," ESRI Discussion paper series 055, Economic and Social Research Institute (ESRI).

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