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Is consumption smooth at the cost of volatile leisure? An investigation of rural India

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  • Pushkar Maitra

Abstract

This study examines the institutions in rural India that enable households to insure against unanticipated idiosyncratic shocks to income. Using a decentralized general equilibrium model it tests for consumption and leisure insurance against unanticipated income shocks. It is found that differential access to markets (particularly financial markets) force villagers to differ in their response to similar shocks. Medium and large farmers have unrestricted access to credit markets and are unaffected by unanticipated changes in household income. The small farmers are excluded from credit markets. However, some of the small farmers are able to insure consumption against unanticipated income shocks through compensating changes in labour market participation and reducing own farm work.

Suggested Citation

  • Pushkar Maitra, 2001. "Is consumption smooth at the cost of volatile leisure? An investigation of rural India," Applied Economics, Taylor & Francis Journals, vol. 33(6), pages 727-734.
  • Handle: RePEc:taf:applec:v:33:y:2001:i:6:p:727-734
    DOI: 10.1080/00036840122570
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    Citations

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    Cited by:

    1. Chris Elbers & Jan Willem Gunning & Lei Pan, 2009. "Insurance and rural welfare: what can panel data tell us?," Applied Economics, Taylor & Francis Journals, vol. 41(24), pages 3093-3101.
    2. Khan, Aubhik & Ravikumar, B., 2001. "Growth and risk-sharing with private information," Journal of Monetary Economics, Elsevier, vol. 47(3), pages 499-521, June.
    3. Degnet, Abebaw & Mburu, John & Holm-Müller, Karin, 2008. "Responding to an Income Shock through Increasing Forest Extraction: Survey Evidence from Ethiopian Coffee Farmers," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 17(2).
    4. Berloffa, Gabriella & Modena, Francesca, 2013. "Income shocks, coping strategies, and consumption smoothing: An application to Indonesian data," Journal of Asian Economics, Elsevier, vol. 24(C), pages 158-171.
    5. Chris Elbers & Jan Willem Gunning & Lei Pan, 2009. "Insurance and rural welfare: what can panel data tell us?," Applied Economics, Taylor & Francis Journals, vol. 41(24), pages 3093-3101.

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