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Consumption vulnerability to risk in rural Pakistan

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  • Takashi Kurosaki

Abstract

As one of the dimensions of vulnerability, this paper empirically investigates the inability of rural dwellers to cope with negative income shocks. A variable coefficient regression model is applied to a two-period household panel dataset collected in the North-West Frontier Province, Pakistan, an area with high incidence of income poverty and low human development. The empirical model allows for a different ability to smooth consumption, approximated by a linear function of households' attributes, and controls for the endogeneity of observed changes in income, using qualitative information on subjective risk assessment. Estimation results show that the ability to cope with negative income shocks is lower for households that are aged, landless and do not receive remittances regularly.

Suggested Citation

  • Takashi Kurosaki, 2006. "Consumption vulnerability to risk in rural Pakistan," Journal of Development Studies, Taylor & Francis Journals, vol. 42(1), pages 70-89.
    • Handle: RePEc:taf:jdevst:v:42:y:2006:i:1:p:70-89
    DOI: 10.1080/00220380500356696
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    References listed on IDEAS

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    1. Luc J. Christiaensen & Kalanidhi Subbarao, 2005. "Towards an Understanding of Household Vulnerability in Rural Kenya," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 14(4), pages 520-558, December.
    2. Margaret Grosh & Paul Glewwe, 2000. "Designing Household Survey Questionnaires for Developing Countries : Lessons from 15 Years of the Living Standards Measurement Study, Volume 3," World Bank Publications, The World Bank, number 15195.
    3. Ligon, Ethan & Schechter, Laura, 2002. "Measuring Vulnerability: The Director's Cut," WIDER Working Paper Series 086, World Institute for Development Economic Research (UNU-WIDER).
    4. Margaret Grosh & Paul Glewwe, 2000. "Designing Household Survey Questionnaires for Developing Countries : Lessons from 15 Years of the Living Standards Measurement Study, Volume 2," World Bank Publications, The World Bank, number 15194.
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    Cited by:

    1. Hanjra, Munir A. & Ferede, Tadele & Gutta, Debel Gemechu, 2009. "Reducing poverty in sub-Saharan Africa through investments in water and other priorities," Agricultural Water Management, Elsevier, vol. 96(7), pages 1062-1070, July.
    2. Gaurav, Sarthak, 2015. "Are Rainfed Agricultural Households Insured? Evidence from Five Villages in Vidarbha, India," World Development, Elsevier, vol. 66(C), pages 719-736.
    3. Kurosaki, Takashi, 2012. "Household-level Recovery after Floods in a Developing Country: Evidence from Pakistan," CEI Working Paper Series 2012-08, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    4. Haughton, Dominique & Le, Thanh Loan Thi, 2007. "Shifts in Living Standards: The Case of Vietnamese Households 1992-1998," Philippine Journal of Development PJD 2005 Vol. XXXII No. 1, Philippine Institute for Development Studies.
    5. de Haas, Hein, 2009. "Mobility and Human Development," MPRA Paper 19176, University Library of Munich, Germany.
    6. Kurosaki, Takashi, 2017. "Household-Level Recovery after Floods in a Tribal and Conflict-Ridden Society," World Development, Elsevier, vol. 94(C), pages 51-63.
    7. Oded Stark, 2009. "Reasons for Remitting," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 10(3), pages 147-158, July.
    8. Carter, Michael R. & Lybbert, Travis J., 2012. "Consumption versus asset smoothing: testing the implications of poverty trap theory in Burkina Faso," Journal of Development Economics, Elsevier, vol. 99(2), pages 255-264.
    9. Doan, Tinh & Gibson, John & Holmes, Mark, 2010. "What determines credit participation and credit constraints of the poor in peri-urban areas, Vietnam?," MPRA Paper 27509, University Library of Munich, Germany, revised 17 Dec 2010.
    10. Gazi M. Hassan & Shafiqur Rahman, 2015. "Is the Democratisation Process Responsive to Remittance Flows? Evidence from Bangladesh," Working Papers in Economics 15/06, University of Waikato.
    11. 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.
    12. Kurosaki, Takashi, 2013. "Dynamics of Household Assets and Income Shocks in the Long-run Process of Economic Development: The Case of Rural Pakistan," PRIMCED Discussion Paper Series 39, Institute of Economic Research, Hitotsubashi University.
    13. Stefan Dercon & Joseph S. Shapiro, 2007. "Moving On, Staying Behind, Getting Lost: Lessons on poverty mobility from longitudinal data," Economics Series Working Papers GPRG-WPS-075, University of Oxford, Department of Economics.
    14. Mr. S.Hirashima, 2009. "Growth-Poverty Linkage and Income-Asset Relation in Regional Disparity: Evidence from Pakistan and India (The Allama Iqbal Memorial Lecture)," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(4), pages 357-386.
    15. Azeem, Muhammad Masood & Mugera, Amin W. & Schilizzi, Steven, 2016. "Poverty and vulnerability in the Punjab, Pakistan: A multilevel analysis," Journal of Asian Economics, Elsevier, vol. 44(C), pages 57-72.
    16. Hardeweg, Bernd & Wagener, Andreas & Waibel, Hermann, 2013. "A distributional approach to comparing vulnerability, applied to rural provinces in Thailand and Vietnam," Journal of Asian Economics, Elsevier, vol. 25(C), pages 53-65.
    17. Hari Ram Lohano, 2009. "Poverty Dynamics in Rural Sindh, Pakistan," Working Papers id:2334, eSocialSciences.
    18. Tomoki Fujii, 2016. "Concepts and measurement of vulnerability to poverty and other issues: a review of literature," Chapters,in: The Asian ‘Poverty Miracle’, chapter 3, pages 53-83 Edward Elgar Publishing.
    19. Takashi Kurosaki, 2006. "The measurement of transient poverty: Theory and application to Pakistan," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(3), pages 325-345, December.
    20. Rashida Haq, 2012. "Shocks as a Source of Vulnerability: An Empirical Investigation from Pakistan," Poverty and Social Dynamics Paper Series 2012:06, Pakistan Institute of Development Economics.
    21. Hein de Haas, 2009. "Mobility and Human Development," Human Development Research Papers (2009 to present) HDRP-2009-01, Human Development Report Office (HDRO), United Nations Development Programme (UNDP), revised Apr 2009.
    22. Rashida Haq, 2015. "Shocks as a Source of Vulnerability: An Empirical Investigation from Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 54(3), pages 245-272.
    23. Kurosaki, Takashi, 2015. "Household-Level Recovery after Floods in a Tribal and Conflict-Ridden Society," CEI Working Paper Series 2015-5, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    24. Gazi M. Hassan & Mark J. Holmes, 2017. "How Do Workers' Remittances Respond to Lending Rates?," Working Papers in Economics 17/02, University of Waikato.

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