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Consumption insurance and vulnerability to poverty

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  • Skoufias, Emmanuel
  • Quisumbing, Agnes R.

Abstract

This paper synthesizes the results of five studies using household panel data from Bangladesh, Ethiopia, Mali, Mexico and Russia, which examine the extent to which households are able through formal and/or informal arrangements to insure their consumption from specific economic shocks and fluctuations in their real income. Building on the recent literature of consumption smoothing and risk sharing, the degree of consumption insurance is defined by the degree to which the growth rate of household consumption covaries with the growth rate of household income. All the case studies show that food consumption is better insured than nonfood consumption from idiosyncratic shocks. Adjustments in nonfood consumption appear to act as a mechanism for partially insuring ex-post the consumption of food from the effects of income changes. Food consumption is also more likely to be covered by informal insurance arrangements at the community level than nonfood consumption. Linkages among consumption variability, the level of household consumption, the incidence of poverty, and the probability of being ever poor and the proportion of time spent in poverty are also explored for Bangladesh, Ethiopia, and Russia. All the case studies also show that households use a portfolio of risk-coping strategies, but that different types of households may have differential ability to use these strategies. In particular, poorer households may be less able to use mechanisms that rely to initial wealth as collateral. In this regard, public transfer programs may have a more redistributive effect.

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Paper provided by International Food Policy Research Institute (IFPRI) in its series FCND discussion papers with number 155.

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Date of creation: 2003
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Handle: RePEc:fpr:fcnddp:155

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Cited by:
  1. Phoebe Koundouri & Richard Carson & Céline Nauges, . "Arsenic Mitigation in Bangladesh: A Household Labor Market Approach," DEOS Working Papers 1029, Athens University of Economics and Business.
  2. del Ninno, Carlo & Dorosh, Paul A. & Smith, Lisa C., 2003. "Public policy, food markets, and household coping strategies in Bangladesh," FCND discussion papers, International Food Policy Research Institute (IFPRI) 156, International Food Policy Research Institute (IFPRI).
  3. Grimm, Michael, 2006. "Mortality and survivors' consumption," Proceedings of the German Development Economics Conference, Berlin 2006, Verein für Socialpolitik, Research Committee Development Economics 9, Verein für Socialpolitik, Research Committee Development Economics.
  4. Dercon, Stefan & Hoddinott, John & Krishnan, Pramila & Woldehannnam, Tassew, 2008. "Collective action and vulnerability: Burial societies in rural Ethiopia," CAPRi working papers, International Food Policy Research Institute (IFPRI) 83, International Food Policy Research Institute (IFPRI).
  5. Vakis, Renos & Kruger, Diana & Mason, Andrew D., 2004. "Shocks and coffee : lessons from Nicaragua," Social Protection Discussion Papers 30164, The World Bank.
  6. Hazel Jean Malapit & Jade Eric Redoblado & Deanna Margarett Cabungcal-Dolor & Jasmin Suministrado, 2006. "Labor Supply Responses to Adverse Shocks under Credit Constraints: Evidence from Bukidnon, Philippines," Working Papers PMMA, PEP-PMMA 2006-15, PEP-PMMA.
  7. Skoufias, Emmanuel & Vinha, Katja & Conroy, Hector V., 2011. "The impacts of climate variability on welfare in rural Mexico," Policy Research Working Paper Series 5555, The World Bank.
  8. Carola Álvarez & Florencia Devoto & Paul Winters, 2006. "Why do the poor leave the safety net in Mexico? A study of the effects of conditionality on dropouts," Working Papers, American University, Department of Economics 2006-10, American University, Department of Economics.
  9. Deressa, Temesgen T. & Hassan, Rashid M. & Ringler, Claudia, 2009. "Assessing household vulnerability to climate change: The case of farmers in the Nile Basin of Ethiopia," IFPRI discussion papers 935, International Food Policy Research Institute (IFPRI).
  10. Baiyegunhi, L.J.S. & Fraser, Gavin C.G., 2010. "Determinants of Household Poverty Dynamics in Rural Regions of the Eastern Cape Province, South Africa," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Afri 97078, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).
  11. Jolejole-Foreman, Maria Christina & Baylis, Katherine R. & Lipper, Leslie, 2012. "Land Degradation’s Implications on Agricultural Value of Production in Ethiopia: A look inside the bowl," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil, International Association of Agricultural Economists 126251, International Association of Agricultural Economists.

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