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Food Aid and Informal Insurance

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  • Stefan Dercon
  • Pramila Krishnan

Abstract

Households in developing countries use a variety of informal mechanisms to cope with risk, including mutual support and risk-sharing. These mechanisms cannot avoid that they remain vulnerable to shocks. Public programs in the form of food aid distribution and food-for-work programs are meant to protect vulnerable households from consumption and nutrition downturns by providing a safety net. In this paper we look into the extent to which food aid helps smooth consumption by reducing the impact of negative shocks, taking into account informal risk-sharing arrangements. Using panel data from Ethiopia, we find that despite relatively poor targeting of the food aid, the programs contribute to better consumption outcomes, largely via intra-village risk sharing.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number WPS/2003-01.

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Date of creation: 01 Jan 2003
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Handle: RePEc:oxf:wpaper:wps/2003-01

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Keywords: risk-sharing; informal insurance; safety nets; food aid.;

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References

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Citations

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Cited by:
  1. Takasaki, Yoshito, 2012. "How is disaster aid allocated within poor villages?," PRIMCED Discussion Paper Series, Institute of Economic Research, Hitotsubashi University 25, Institute of Economic Research, Hitotsubashi University.
  2. Barrett, Christopher B. & McPeak, John G., 2003. "Poverty Traps and Safety Nets," Working Papers, Cornell University, Department of Applied Economics and Management 127808, Cornell University, Department of Applied Economics and Management.
  3. Caeyers, Bet & Dercon, Stefan, 2012. "Political Connections and Social Networks in Targeted Transfer Programs: Evidence from Rural Ethiopia," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8860, C.E.P.R. Discussion Papers.
  4. Philippe LeMay-Boucher, 2007. "Insurance for the Poor: The Case of Informal Insurance Groups in Benin," CERT Discussion Papers, Centre for Economic Reform and Transformation, Heriot Watt University 0707, Centre for Economic Reform and Transformation, Heriot Watt University.
  5. Andersson, Camilla & Mekonnen, Alemu & Stage, Jesper, 2009. "Impacts of the Productive Safety Net Program in Ethiopia on Livestock and Tree Holdings of Rural Households," Discussion Papers, Resources For the Future dp-09-05-efd, Resources For the Future.
  6. Lentz, Erin C. & Barrett, Christopher B., 2004. "Food Aid Targeting, Shocks And Private Transfers Among East African Pastoralists," 2004 Annual meeting, August 1-4, Denver, CO, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 20247, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  7. Takashi Yamano & Harold Alderman & Luc Christiaensen, 2005. "Child Growth, Shocks, and Food Aid in Rural Ethiopia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 87(2), pages 273-288.
  8. Lam, Lai Ming & Paul, Saumik, 2013. "Displacement and Erosion of Informal Risk-Sharing: Evidence from Nepal," World Development, Elsevier, Elsevier, vol. 43(C), pages 42-55.
  9. Gelan, Ayele Ulfata, 2007. "Does food aid have disincentive effects on local production? A general equilibrium perspective on food aid in Ethiopia," Food Policy, Elsevier, Elsevier, vol. 32(4), pages 436-458, August.
  10. Daniel Clarke & Sefan Dercon, 2009. "Insurance, Credit and Safety Nets for the Poor in a World of Risk," Working Papers, United Nations, Department of Economics and Social Affairs 81, United Nations, Department of Economics and Social Affairs.
  11. del Ninno, Carlo & Dorosh, Paul A. & Subbarao, Kalanidhi, 2007. "Food aid, domestic policy and food security: Contrasting experiences from South Asia and sub-Saharan Africa," Food Policy, Elsevier, Elsevier, vol. 32(4), pages 413-435, August.
  12. Alix-Garcia, Jennifer & Bartlett, Anne & Saah, David, 2012. "Displaced Populations, Humanitarian Assistance and Hosts: A Framework for Analyzing Impacts on Semi-urban Households," World Development, Elsevier, Elsevier, vol. 40(2), pages 373-386.
  13. Little, Peter D., 2008. "Food Aid Dependency in Northeastern Ethiopia: Myth or Reality?," World Development, Elsevier, Elsevier, vol. 36(5), pages 860-874, May.
  14. Macours, Karen & Premand, Patrick & Vakis, Renos, 2012. "Transfers, Diversification and Household Risk Strategies: Experimental evidence with lessons for climate change adaptation," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8940, C.E.P.R. Discussion Papers.
  15. Alderman, Harold & Yemtsov, Ruslan, 2012. "Productive role of safety nets : background paper for the World Bank 2012-2022 social protection and labor strategy," Social Protection Discussion Papers 67609, The World Bank.
  16. Heemskerk, Marieke & Norton, Anastasia & de Dehn, Lise, 2004. "Does Public Welfare Crowd Out Informal Safety Nets? Ethnographic Evidence from Rural Latin America," World Development, Elsevier, Elsevier, vol. 32(6), pages 941-955, June.
  17. Alem, Yonas & Broussard, Nzinga H., 2013. "Do Safety Nets Promote Technology Adoption? Panel data evidence from rural Ethiopia," Working Papers in Economics, University of Gothenburg, Department of Economics 556, University of Gothenburg, Department of Economics.

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