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Household Responses to Adverse Income Shocks in Latin America

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  • Alejandro Gaviria

Abstract

This paper uses a new data set to study household responses to adverse income shocks in seven Latin American countries. The results show (i) that households respond to income shocks mainly by increasing their labor force participation, selling assets, and cutting back on human capital investments, (ii) that poor households are the most likely to be affected by adverse income shocks, and (iii) that lower-middle-class households are more likely to cut back on human capital investments and move abroad when faced with an adverse income shock. Taken together, these results offer ample justification for publicly funded safety nets that target the poor.

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Bibliographic Info

Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4273.

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Date of creation: Jul 2001
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Handle: RePEc:idb:wpaper:4273

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  1. Alejandro Gaviria & Carmen Pagés-Serra, 1999. "Patterns of Crime Victimization in Latin America," IDB Publications 4124, Inter-American Development Bank.
  2. Gaviria, Alejandro & Pages, Carmen, 2002. "Patterns of crime victimization in Latin American cities," Journal of Development Economics, Elsevier, vol. 67(1), pages 181-203, February.
  3. Nora Lustig, 2000. "Crisis and the Poor: Socially Responsible Macroeconomics," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
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Cited by:
  1. FIEL, Konrad Adenauer Stiftung & FIEL (ed.), 2006. "Planeando el futuro. Las familias Argentinas y sus decisiones de consumo, ahorro e inversión en capital humano," Books at FIEL, FIEL, edition 1, volume 1, number 0306.
  2. Juan José Echavarría & Enrique López & Sergio Ocampo & Norberto Rodríguez, 2011. "Choques, instituciones laborales y desempleo en Colombia," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE.
  3. Pierre-Richard Agénor, 2004. "Macroeconomic Adjustment and the Poor: Analytical Issues and Cross-Country Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 18, pages 351-408, 07.
  4. Jorge A. Paz, 2008. "Cambios en el ingreso del hogar y sus efectos sobre la escolaridad de menores (Argentina, 1995-2003)," Working Papers 2, Instituto de Estudios Laborales y del Desarrollo Económico (IELDE) - Universidad Nacional de Salta - Facultad de Ciencias Económicas, Jurídicas y Sociales.
  5. World Bank, 2004. "Uruguay : Poverty Update 2003," World Bank Other Operational Studies 15682, The World Bank.

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