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Is Social Capital the Capital of the Poor? The Role of Family and Community in Helping Insure Living Standards against Health Shocks

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  • Paul Gertler
  • David I. Levine
  • Enrico Moretti

Abstract

We estimate the effect of social capital on the ability of households to insure consumption after unexpected negative shocks. Many theoretical models argue that strong ties to extended family members and to one's community help protect families when an adult becomes ill or disabled. Using household-level longitudinal data on Indonesian families, we test whether consumption declines less after a negative health shock for those with many ties to their community and for those in a community with dense ties. We take advantage of a particularly rich set of measures of social capital including measures of civic participation; the existence of traditions of mutual cooperation; long-term relationships in the community and ethnic and linguistic diversity. We also examine the role of a large and prosperous extended family. We find little support for the hypothesis that social capital is the capital of the poor. (JEL classification: D12, D13, G21, G22, O16) Copyright 2006, Oxford University Press.

Suggested Citation

  • Paul Gertler & David I. Levine & Enrico Moretti, 2006. "Is Social Capital the Capital of the Poor? The Role of Family and Community in Helping Insure Living Standards against Health Shocks," CESifo Economic Studies, CESifo, vol. 52(3), pages 455-499, September.
  • Handle: RePEc:oup:cesifo:v:52:y:2006:i:3:p:455-499
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    File URL: http://hdl.handle.net/10.1093/cesifo/ifl012
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    References listed on IDEAS

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    1. Demirguc-Kent, Asli & Detragiache, Enrica, 1998. "Financial liberalization and financial fragility," Policy Research Working Paper Series 1917, The World Bank.
    2. Eswar S Prasad & Qing Wang & Thomas Rumbaugh, 2005. "Putting the Cart Before the Horse? Capital Account Liberalization and Exchange Rate Flexibility in China," IMF Policy Discussion Papers 05/1, International Monetary Fund.
    3. Monticelli, Carlo & Strauss-Kahn, Marc-Olivier, 1993. "European Integration and the Demand for Broad Money," The Manchester School of Economic & Social Studies, University of Manchester, pages 345-366.
    4. Alicia Garcia Herrero & Daniel Santabarbara Garcia, 2004. "Where Is The Chinese Banking System Going With The Ongoing Reform?," Macroeconomics 0408001, EconWPA.
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    Cited by:

    1. Geng, Xin & Ide, Vera & Janssens, Wendy & Kramer, Berber & van der List, Marijn, 2017. "Health insurance, a friend in need? Evidence from financial and health diaries in Kenya," IFPRI discussion papers 1664, International Food Policy Research Institute (IFPRI).
    2. Philipp Marek & Benjamin Damm & Tong-Yaa Su, 2015. "Beyond the Employment Agency: The Effect of Social Capital on the Duration of Unemployment," SOEPpapers on Multidisciplinary Panel Data Research 812, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Tesfamicheal Wossen & Salvatore Falco & Thomas Berger & William McClain, 2016. "You are not alone: social capital and risk exposure in rural Ethiopia," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, pages 799-813.
    4. Angelucci Manuela & De Giorgi Giacomo & Rangel Marcos & Rasul Imran, 2009. "Village Economies and the Structure of Extended Family Networks," The B.E. Journal of Economic Analysis & Policy, De Gruyter, pages 1-46.
    5. Stacy Carlson & Era Dabla-Norris & Mika Saito & Yu Shi, 2015. "Household Financial Access and Risk Sharing in Nigeria," IMF Working Papers 15/169, International Monetary Fund.

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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