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Shocks as a Source of Vulnerability: An Empirical Investigation from Pakistan

Listed author(s):
  • Rashida Haq

    (Pakistan Institute of Development Economics, Islamabad)

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    The objective of this paper is to investigate the incidence of different types of shocks in rural Pakistan and identify the household characteristics that are associated with this phenomenon. It is observed that one-third of households experience an adverse shock, be it natural/agricultural, economic, social or relating to health. The natural/agricultural shocks have major share in the total burden of shocks while the households‘ coping mechanism is overwhelmingly informal and largely asset-based. The poorest of the households adopt behaviour-based strategies like reducing food consumption, employ child labour, work more hours etc. Overall, households of with less educated heads, high dependency ratio, large household size, low welfare ratio, farm household, ownership of land and residing in south Punjab or Sindh are more vulnerable to suffer shocks, particularly of income. Vulnerability in terms of a decline in consumption is observed for households who are hit by natural/agricultural or health shocks. For all these reasons, a gradual shift from traditional emergency relief measures towards ex-ante actions to reduce and mitigate hazard impacts should be encouraged along with non- exploitative credit and more effective safety nets.

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    File URL: http://www.pide.org.pk/pdf/PDR/2015/Volume3/245-272.pdf
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    Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

    Volume (Year): 54 (2015)
    Issue (Month): 3 ()
    Pages: 245-272

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    Handle: RePEc:pid:journl:v:54:y:2015:i:3:p:245-272
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    1. Grant Jacobsen, 2009. "Health and Death Risk and Income Decisions: Evidence from Microfinance," Journal of Development Studies, Taylor & Francis Journals, vol. 45(6), pages 934-946.
    2. Takashi Kurosaki, 2006. "Consumption vulnerability to risk in rural Pakistan," Journal of Development Studies, Taylor & Francis Journals, vol. 42(1), pages 70-89.
    3. Ethan Ligon & Laura Schechter, 2003. "Measuring Vulnerability," Economic Journal, Royal Economic Society, vol. 113(486), pages 95-102, March.
    4. Rasmus Heltberg & Niels Lund, 2009. "Shocks, Coping, and Outcomes for Pakistan's Poor: Health Risks Predominate," Journal of Development Studies, Taylor & Francis Journals, vol. 45(6), pages 889-910.
    5. Foster, Andrew D, 1995. "Prices, Credit Markets and Child Growth in Low-Income Rural Areas," Economic Journal, Royal Economic Society, vol. 105(430), pages 551-570, May.
    6. Hanan G. Jacoby & Emmanuel Skoufias, 1997. "Risk, Financial Markets, and Human Capital in a Developing Country," Review of Economic Studies, Oxford University Press, vol. 64(3), pages 311-335.
    7. Fafchamps, Marcel, 2010. "Vulnerability, risk management and agricultural development," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 5(1), September.
    8. Kurosaki, Takashi, 2013. "Vulnerability of Household Consumption to Floods and Droughts in Developing Countries: Evidence from Pakistan," CEI Working Paper Series 2012-10, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    9. Kurosaki, Takashi & Fafchamps, Marcel, 2002. "Insurance market efficiency and crop choices in Pakistan," Journal of Development Economics, Elsevier, vol. 67(2), pages 419-453, April.
    10. Bob Baulch & John Hoddinott, 2000. "Economic mobility and poverty dynamics in developing countries," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 1-24.
    11. Paxson, Christina H, 1992. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand," American Economic Review, American Economic Association, vol. 82(1), pages 15-33, March.
    12. Fafchamps, Marcel, 2010. "Vulnerability, risk management and agricultural development," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 5(1), September.
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