Advanced Search
MyIDEAS: Login

Consumption insurance with heterogeneous preferences. Can sharecropping help complete markets ?


Author Info

  • Dubois, P.


This paper presents the first evidence linking directly household consumption profiles to the widely studied institution of sharecropping in developing countries. On the one hand, the theoretical rationale for sharecropping often calls for its risk sharing properties. On the other hand empirical studies on risk sharing in consumption often reject full insurance but admit that some formal or informal mechanisms help households to insure substantially their consumption since income shocks do not fully transfer in consumption. Risk sharing and consumption insurance achieved by rural households from three provinces of Pakistan are studied allowing for heterogeneity of preferences and in particular in risk aversion. As full insurance is rejected, there is some scope for Pareto improving risk sharing mechanisms. Actually, markets are found to be incomplete even at the village level and evidence that the sharecropping institution helps completing markets is exposed. ...French Abstract : Cet article présente le premier test empirique liant directement les profils de consommation des ménages à l'institution tant étudiée du métayage dans les pays en développement. D'une part, la justification théorique du métayage fait souvent appel à ses propriétés de partage de risque. D'autre part, les études empiriques sur le partage de risque en consommation rejettent souvent l'assurance complète mais admettent que des mécanismes formels ou informels permettent aux ménages d'assurer substantiellement leur consommation puisque les chocs de revenu ne sont pas complètement répercutés sur la consommation. Le partage de risque atteint par des ménages ruraux de trois provinces du Pakistan est étudié tout en autorisant un certain degré d'hétérogénéité des préférences et en particulier en ce qui concerne l'aversion au risque. Comme l'assurance parfaite est rejetée, des mécanismes de partage de risque peuvent améliorer l'allocation des ressources. En effet, les marchés sont incomplets même au niveau du village et les tests empiriques montrent que le métayage permet de compléter les marchés. Les ménages capables d'utiliser ce choix contractuel, permettant de partager le risque de production, sont mieux assurés contre les chocs idiosyncratiques. Il semble que le métayage fournisse un bien contingent que les autres marchés accessibles ne permettent pas de répliquer. Ce fait empirique montre que les contrats agricoles jouent un rôle important dans le partage du risque de production. Enfin, grâce au paramètre d'aversion au risque estimé, l'argument du partage de risque dans le choix contractuel prédît par les théories standard Principal-Agent est testé directement. Les agents les plus averses au risque préfèrent les contrats de métayage au contrats de fermage et avec un taux de partage de la production plus faible lorsqu'ils sont plus averses au risque.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL:
Our checks indicate that this address may not be valid because: 404 Not Found ( [301 Moved Permanently]--> If this is indeed the case, please notify (RAYNAL Helene)
Download Restriction: no

Bibliographic Info

Paper provided by French Institute for Agronomy Research (INRA), Economics Laboratory in Toulouse (ESR Toulouse) in its series Economics Working Paper Archive (Toulouse) with number 25.

as in new window
Length: 34 p.
Date of creation: 2001
Date of revision:
Handle: RePEc:rea:inrawp:25

Contact details of provider:
Postal: INRA ESR - BP27 - 31326 Castanet Tolosan cedex - France
Fax: (33)
Web page:
More information through EDIRC

Order Information:
Postal: INRA ESR - BP27 - 31326 Castanet Tolosan cedex - France

Related research


Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:


No references listed on IDEAS
You can help add them by filling out this form.


Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Pierre-André Chiappori & Bernard Salanié, 2002. "Testing Contract Theory : A Survey of Some Recent Work," Working Papers 2002-11, Centre de Recherche en Economie et Statistique.
  2. Irac, D. & Minoiu, C., 2006. "Risk Insurance in a Transition Economy: Evidence from Rural Romania," Working papers 154, Banque de France.
  3. Ethan Ligon & Pierre Dubois, 2012. "Incentives & Nutrition for Rotten Kids: The Quantity & Quality of Food Allocated within Philippine Households," 2012 Meeting Papers 375, Society for Economic Dynamics.
  4. Sam Schulhofer-Wohl, 2011. "Heterogeneity and Tests of Risk Sharing," Journal of Political Economy, University of Chicago Press, vol. 119(5), pages 925 - 958.
  5. Luis H.B. Braido, 2005. "Risk and Insurance in Sharecropping," Risk and Insurance 0508002, EconWPA.


This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


Access and download statistics


When requesting a correction, please mention this item's handle: RePEc:rea:inrawp:25. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RAYNAL Helene).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.