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Mortality and Survivors' Consumption

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  • Michael Grimm

Abstract

In developing countries illness shocks can have a severe impact on household income. Few studies have so fare examined the effects of mortality. The major difference between illness and mortality shocks is that a death of a household member does not only induce direct costs such as medical and funeral costs and possibly a loss in income, but that also the number of consumption units in the household is reduced. Using data for Indonesia, I show that the economic costs related to the death of children and older persons seem to be fully compensated by the decrease of consumption units. In contrast, when prime-age adults die, survivors face additional costs and, in consequence, implement coping strategies. It is shown that these are quite efficient and it seems that in terms of consumption households even overcompensate their loss, although they may face a higher vulnerability in the longer term. The results suggest that the implementation of general formal safety nets can give priority to the insurance of other types of risks, such as unemployment, illness or natural disasters.

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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 611.

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Length: 30 p.
Date of creation: 2006
Date of revision:
Handle: RePEc:diw:diwwpp:dp611

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Keywords: Mortality; consumption smoothing; risk; micro-model of consumption growth; Indonesia.;

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References

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Cited by:
  1. Günther, Isabel & Harttgen, Kenneth, 2009. "Estimating Households Vulnerability to Idiosyncratic and Covariate Shocks: A Novel Method Applied in Madagascar," World Development, Elsevier, Elsevier, vol. 37(7), pages 1222-1234, July.
  2. Stefan Dercon & Kathleen Beegle, 2007. "Adult Mortality and Consumption Growth in the Age of HIV/AIDS," Economics Series Working Papers WPS/2007-02, University of Oxford, Department of Economics.
  3. Toman Omar Mahmoud & Rainer Thiele, 2009. "Does AIDS-Related Mortality Reduce Per-Capita Household Income? Evidence from Rural Zambia," Kiel Working Papers 1530, Kiel Institute for the World Economy.
  4. Kim Jungho & Alexia Prskawetz, 2009. "External Shocks, Household Consumption and Fertility in Indonesia," Working Papers, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna 0604, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna.

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