IDEAS home Printed from https://ideas.repec.org/a/wly/econjl/v128y2018i615p2613-2651.html
   My bibliography  Save this article

Consumption and Investment in Resource Pooling Family Networks

Author

Listed:
  • Manuela Angelucci
  • Giacomo De Giorgi
  • Imran Rasul

Abstract

This article examines a novel motive for resource pooling in family networks in rural economies: to relax credit constraints and facilitate investment in non‐collateraliseable assets for which credit market imperfections are most binding. We thus complement established literatures examining risk‐sharing motives for resource transfers within family networks, as well as motives based on kinship tax obligations. We do so exploiting the Progresa programme data, in which family networks can be identified, households are subject to large exogenous resource inflows, and detailed responses on consumption and an array of investments can be tracked in a household panel over five years.

Suggested Citation

  • Manuela Angelucci & Giacomo De Giorgi & Imran Rasul, 2018. "Consumption and Investment in Resource Pooling Family Networks," Economic Journal, Royal Economic Society, vol. 128(615), pages 2613-2651, November.
  • Handle: RePEc:wly:econjl:v:128:y:2018:i:615:p:2613-2651
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ecoj.12534
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rosenzweig, Mark R & Wolpin, Kenneth I, 1993. "Credit Market Constraints, Consumption Smoothing, and the Accumulation of Durable Production Assets in Low-Income Countries: Investment in Bullocks in India," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 223-244, April.
    2. Kaivan Munshi, 2011. "Strength in Numbers: Networks as a Solution to Occupational Traps," Review of Economic Studies, Oxford University Press, vol. 78(3), pages 1069-1101.
    3. Benjamin, Dwayne, 1992. "Household Composition, Labor Markets, and Labor Demand: Testing for Separation in Agricultural Household Models," Econometrica, Econometric Society, vol. 60(2), pages 287-322, March.
    4. Jean-Philippe Platteau, 1997. "Mutual insurance as an elusive concept in traditional rural communities," Journal of Development Studies, Taylor & Francis Journals, vol. 33(6), pages 764-796.
    5. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-591, May.
    6. Bhalla, Surjit S, 1979. "Measurement Errors and the Permanent Income Hypothesis: Evidence from Rural India," American Economic Review, American Economic Association, vol. 69(3), pages 295-307, June.
    7. Ethan Ligon, 1998. "Risk Sharing and Information in Village Economies," Review of Economic Studies, Oxford University Press, vol. 65(4), pages 847-864.
    8. 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.
    9. Baland, Jean-Marie & Bonjean, Isabelle & Guirkinger, Catherine & Ziparo, Roberta, 2016. "The economic consequences of mutual help in extended families," Journal of Development Economics, Elsevier, vol. 123(C), pages 38-56.
    10. Kenneth I. Wolpin & Petra E. Todd, 2006. "Assessing the Impact of a School Subsidy Program in Mexico: Using a Social Experiment to Validate a Dynamic Behavioral Model of Child Schooling and Fertility," American Economic Review, American Economic Association, vol. 96(5), pages 1384-1417, December.
    11. Eliana La Ferrara, 2003. "Kin Groups and Reciprocity: A Model of Credit Transactions in Ghana," American Economic Review, American Economic Association, vol. 93(5), pages 1730-1751, December.
    12. Garance Genicot & Debraj Ray, 2003. "Group Formation in Risk-Sharing Arrangements," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 87-113.
    13. Mace, Barbara J, 1991. "Full Insurance in the Presence of Aggregate Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 928-956, October.
    14. Jean-Philippe Platteau, 2000. "Allocating and Enforcing Property Rights in Land: Informal versus Formal Mechanisms in Subsaharan Africa," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 26, pages 55-81.
    15. Attanasio, Orazio P. & Kaufmann, Katja M., 2014. "Education choices and returns to schooling: Mothers' and youths' subjective expectations and their role by gender," Journal of Development Economics, Elsevier, vol. 109(C), pages 203-216.
    16. Manuela Angelucci, 2015. "Migration and Financial Constraints: Evidence from Mexico," The Review of Economics and Statistics, MIT Press, vol. 97(1), pages 224-228, March.
    17. Rosenzweig, Mark R, 1988. "Risk, Implicit Contracts and the Family in Rural Areas of Low-income Countries," Economic Journal, Royal Economic Society, vol. 98(393), pages 1148-1170, December.
    18. Rosenzweig, Mark R & Stark, Oded, 1989. "Consumption Smoothing, Migration, and Marriage: Evidence from Rural India," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 905-926, August.
    19. Fafchamps, Marcel & Pender, John, 1997. "Precautionary Saving, Credit Constraints, and Irreversible Investment: Theory and Evidence from Semiarid India," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(2), pages 180-194, April.
    20. 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.
    21. Paul Schultz, T., 2004. "School subsidies for the poor: evaluating the Mexican Progresa poverty program," Journal of Development Economics, Elsevier, vol. 74(1), pages 199-250, June.
    22. Coate, Stephen & Ravallion, Martin, 1993. "Reciprocity without commitment : Characterization and performance of informal insurance arrangements," Journal of Development Economics, Elsevier, vol. 40(1), pages 1-24, February.
    23. Behrman, Jere R & Sengupta, Piyali & Todd, Petra, 2005. "Progressing through PROGRESA: An Impact Assessment of a School Subsidy Experiment in Rural Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 54(1), pages 237-275, October.
    24. Cochrane, John H, 1991. "A Simple Test of Consumption Insurance," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 957-976, October.
    25. Musgrove, Philip, 1979. "Permanent Household Income and Consumption in Urban South America," American Economic Review, American Economic Association, vol. 69(3), pages 355-368, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ligon, Ethan & Schechter, Laura, 2017. "Structural experimentation to distinguish between models of risk sharing with frictions in rural Paraguay," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt9891t8g3, Department of Agricultural & Resource Economics, UC Berkeley.
    2. Orazio Attanasio & Corina Mommaerts & Costas Meghir, 2015. "Insurance in Extended Family Networks," Cowles Foundation Discussion Papers 1996, Cowles Foundation for Research in Economics, Yale University.
    3. Vesall Nourani & Christopher Barrett & Eleonora Patacchini & Thomas Walker, 2019. "Working Paper 313 - Altruism, Insurance, and Costly Solidarity Commitments," Working Paper Series 2439, African Development Bank.
    4. repec:eee:wdevel:v:114:y:2019:i:c:p:122-137 is not listed on IDEAS
    5. repec:eee:jeeman:v:90:y:2018:i:c:p:249-268 is not listed on IDEAS

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:econjl:v:128:y:2018:i:615:p:2613-2651. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley Content Delivery). General contact details of provider: http://edirc.repec.org/data/resssea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.