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How do the poor cope with hardships when mutual assistance is unavailable?

  • Masahiro Shoji


    (University of Tokyo)

This paper investigates how risk coping strategies differ between idiosyncratic and covariate income shocks using evidence from a nation-wide flood in Bangladesh. It is found that availability of coping strategies significantly depends on the covariate-idiosyncratic characteristic of shocks. The main strategies for idiosyncratic and moderate covariate shocks are interest-free informal credit and additional labor supply for fishing, but they are not utilized to cope with the severe covariate shocks. Instead, people must resort to borrowing with high interest as a last resort.

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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 15 (2008)
Issue (Month): 13 ()
Pages: 1-17

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Handle: RePEc:ebl:ecbull:eb-08o10015
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  1. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 103-114, Summer.
  2. Handa, Sudhanshu & King, Damien, 2003. "Adjustment with a Human Face? Evidence from Jamaica," World Development, Elsevier, vol. 31(7), pages 1125-1145, July.
  3. Harounan Kazianga & Christopher Udry, 2004. "Consumption Smoothing? Livestock, Insurance and Drought in Rural Burkina Faso," Working Papers 898, Economic Growth Center, Yale University.
  4. Morduch, J., 1995. "Poverty and Vulnerability," Papers 477, Harvard - Institute for International Development.
  5. Marcel Fafchamps & Flore Gubert, 2005. "The Formation of Risk Sharing Networks," Working Papers DT/2005/13, DIAL (Développement, Institutions et Mondialisation).
  6. Kochar, Anjini, 1995. "Explaining Household Vulnerability to Idiosyncratic Income Shocks," American Economic Review, American Economic Association, vol. 85(2), pages 159-64, May.
  7. Stefan Dercon, 2000. "Income risk, coping strategies and safety nets," Economics Series Working Papers WPS/2000-26, University of Oxford, Department of Economics.
  8. Udry, Christopher, 1995. "Risk and Saving in Northern Nigeria," American Economic Review, American Economic Association, vol. 85(5), pages 1287-1300, December.
  9. Christopher Udry, 1994. "Risk and Insurance in a Rural Credit Market: An Empirical Investigation in Northern Nigeria," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 495-526.
  10. Ersado, Lire & Alderman, Harold & Alwang, Jeffrey, 2003. "Changes in Consumption and Saving Behavior before and after Economic Shocks: Evidence from Zimbabwe," Economic Development and Cultural Change, University of Chicago Press, vol. 52(1), pages 187-215, October.
  11. Marcel Fafchamps & Susan Lund, 2000. "Risk-Sharing Networks in Rural Philippines," Economics Series Working Papers 10, University of Oxford, Department of Economics.
  12. Martin Ravallion & Shubham Chaudhuri, 1997. "Risk and Insurance in Village India: Comment," Econometrica, Econometric Society, vol. 65(1), pages 171-184, January.
  13. Fafchamps, Marcel & Udry, Christopher & Czukas, Katherine, 1998. "Drought and saving in West Africa: are livestock a buffer stock?," Journal of Development Economics, Elsevier, vol. 55(2), pages 273-305, April.
  14. Shahidur R. Khandker, 2007. "Coping with flood: role of institutions in Bangladesh," Agricultural Economics, International Association of Agricultural Economists, vol. 36(2), pages 169-180, 03.
  15. Anjini Kochar, 1999. "Smoothing Consumption by Smoothing Income: Hours-of-Work Responses to Idiosyncratic Agricultural Shocks in Rural India," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 50-61, February.
  16. repec:dau:papers:123456789/4392 is not listed on IDEAS
  17. Takasaki, Yoshito & Barham, Bradford L. & Coomes, Oliver T., 2004. "Risk coping strategies in tropical forests: floods, illnesses, and resource extraction," Environment and Development Economics, Cambridge University Press, vol. 9(02), pages 203-224, May.
  18. Paxson, Christina H, 1993. "Consumption and Income Seasonality in Thailand," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 39-72, February.
  19. Maddala,G. S., 1986. "Limited-Dependent and Qualitative Variables in Econometrics," Cambridge Books, Cambridge University Press, number 9780521338257, November.
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