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On consumption insurance in poor urban areas: Evidence from Ethiopia

Author

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  • Eskander Alvi

    (Department of Economics, Western Michigan University, Kalamazoo, Michigan, USA)

  • Seife Dendir

    (Department of Economics, Radford University, Radford, Virginia, USA)

Abstract

This paper tests the full insurance and related hypotheses using data from urban households in Ethiopia. Whereas consumption insurance tests have focused on rural areas of developing countries, much less is known about the urban poor who remain precariously positioned in terms of consumption insurance-owing both to weak social bonding that undermines informal arrangements and thin formal insurance and financial markets. Results from OLS and GMM estimations provide evidence to this effect and show that full insurance is strongly rejected for various income and consumption categories even at the local level. The results do suggest however that partial insurance may be taking place though only among the most vulnerable. Copyright © 2008 John Wiley & Sons, Ltd.

Suggested Citation

  • Eskander Alvi & Seife Dendir, 2009. "On consumption insurance in poor urban areas: Evidence from Ethiopia," Journal of International Development, John Wiley & Sons, Ltd., vol. 21(5), pages 699-713.
    • Handle: RePEc:wly:jintdv:v:21:y:2009:i:5:p:699-713
    DOI: 10.1002/jid.1505
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    References listed on IDEAS

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    3. Jalan, Jyotsna & Ravallion, Martin, 1999. "Are the poor less well insured? Evidence on vulnerability to income risk in rural China," Journal of Development Economics, Elsevier, vol. 58(1), pages 61-81, February.
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    7. Emmanuel Skoufias, 2003. "Consumption smoothing in Russia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(1), pages 67-91, March.
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    Cited by:

    1. Beyene, Berhe Mekonnen, 2012. "The Link between International Remittances and Private Interhousehold Transfers," Memorandum 14/2012, Oslo University, Department of Economics.
    2. Nepal, Mani & Bohara, Alok K, 2015. "Consumption insurance under uncertainty: The case of Nepal during Maoist insurgency," International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 5(1), pages 1-31.

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