IDEAS home Printed from https://ideas.repec.org/p/ags/iaae06/25487.html
   My bibliography  Save this paper

Informal Insurance in the Presence of Poverty Traps: Evidence from Southern Ethiopia

Author

Listed:
  • Santos, Paulo
  • Barrett, Christopher B.

Abstract

Fieldwork for this paper was conducted under the Pastoral Risk Management (PARIMA) project of the Global Livestock Collaborative Research Support Program (GL CRSP), funded by the Office of Agriculture and Food Security, Global Bureau, USAID, under grant number DAN-1328-G-00-0046-00, and analysis was underwritten by the USAID SAGA cooperative agreement, grant number HFM-A-00-01-00132-00. Financial support was also provided by the Social Science Research Council's Program in Applied Economics on Risk and Development (through a grant from the John D. and Catherine T. MacArthur Foundation), The Pew Charitable Trusts (through the Christian Scholars Program of the University of Notre Dame), the Fundação para a Ciência e Tecnologia (Portugal), and the Graduate School of Cornell University. Thanks are due to ILRI - Ethiopia for their hospitality and support and to Action for Development (Yabello) for logistical support. We thank Getachew Gebru and our field assistants, Ahmed Ibrahim and Mohammed Ibrahim, for their invaluable assistance in data collection. This is a much revised version of an earlier paper that circulated under the title: "Safety nets or social insurance in the presence of poverty traps? Evidence from southern Ethiopia". We thank Michael Carter, Stefan Dercon, Andrew Foster, Vivian Hoffman, Dhushyanth Raju, Steve Younger and participants at various conferences and seminars for comments that greatly improved this paper. The views expressed here are those of the authors and do not represent any official agency. Any remaining errors are our own.

Suggested Citation

  • Santos, Paulo & Barrett, Christopher B., 2006. "Informal Insurance in the Presence of Poverty Traps: Evidence from Southern Ethiopia," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25487, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae06:25487
    DOI: 10.22004/ag.econ.25487
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/25487/files/cp060429.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.25487?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lentz, Erin C. & Barrett, Christopher B., 2004. "Food Aid Targeting, Shocks And Private Transfers Among East African Pastoralists," 2004 Annual meeting, August 1-4, Denver, CO 20247, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Youngjae Lim & Robert Townsend, 1998. "General Equilibrium Models of Financial Systems: Theory and Measurement in Village Economies," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 59-118, January.
    3. 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.
    4. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 811-846.
      • Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
    5. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-591, May.
    6. Oded Stark & Ita Falk, 2000. "Transfers, Empathy Formation, and Reverse Transfers," International Economic Association Series, in: L.-A. Gérard-Varet & S.-C. Kolm & J. Mercier Ythier (ed.), The Economics of Reciprocity, Giving and Altruism, chapter 8, pages 174-181, Palgrave Macmillan.
    7. Michael Carter & Christopher Barrett, 2006. "The economics of poverty traps and persistent poverty: An asset-based approach," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 178-199.
    8. Cox, Donald & Hansen, Bruce E. & Jimenez, Emmanuel, 2004. "How responsive are private transfers to income? Evidence from a laissez-faire economy," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2193-2219, August.
    9. Santos, Paulo & Barrett, Christopher B., 2004. "Interest And Identity In Network Formation," 2004 Annual meeting, August 1-4, Denver, CO 19920, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Ghatak, Maitreesh, 1999. "Group lending, local information and peer selection," Journal of Development Economics, Elsevier, vol. 60(1), pages 27-50, October.
    11. Dercon, Stefan, 2004. "Growth and shocks: evidence from rural Ethiopia," Journal of Development Economics, Elsevier, vol. 74(2), pages 309-329, August.
    12. Christopher B. Barrett & Michael R. Carter & Jean-Paul Chavas, 2018. "The Economics of Poverty Traps," NBER Books, National Bureau of Economic Research, Inc, number barr-3, October.
    13. Udry, Christopher R. & Conley, Timothy G., 2004. "Social Networks in Ghana," Center Discussion Papers 28488, Yale University, Economic Growth Center.
    14. Quah, Danny, 1997. "Empirics for growth and distribution," LSE Research Online Documents on Economics 2138, London School of Economics and Political Science, LSE Library.
    15. Dercon, Stefan (ed.), 2004. "Insurance Against Poverty," OUP Catalogue, Oxford University Press, number 9780199276837.
    16. Fabio Canova, 2004. "Testing for Convergence Clubs in Income Per Capita: A Predictive Density Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(1), pages 49-77, February.
    17. Cox, Donald & Rank, Mark R, 1992. "Inter-vivos Transfers and Intergenerational Exchange," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 305-314, May.
    18. Paulo Santos & Christopher B. Barrett, 2017. "Heterogeneous Wealth Dynamics: On the Roles of Risk and Ability," NBER Chapters, in: The Economics of Poverty Traps, pages 265-290, National Bureau of Economic Research, Inc.
    19. Takeshi Amemiya, 1975. "Qualitative Response Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 4, number 3, pages 363-372, National Bureau of Economic Research, Inc.
    20. Murgai, Rinku & Winters, Paul & Sadoulet, Elisabeth & Janvry, Alain de, 2002. "Localized and incomplete mutual insurance," Journal of Development Economics, Elsevier, vol. 67(2), pages 245-274, April.
    21. Ravallion, Martin & Lokshin, Michael, 2005. "Lasting local impacts of an economywide crisis," Policy Research Working Paper Series 3503, The World Bank.
    22. Rosenzweig, Mark R & Binswanger, Hans P, 1993. "Wealth, Weather Risk and the Composition and Profitability of Agricultural Investments," Economic Journal, Royal Economic Society, vol. 103(416), pages 56-78, January.
    23. 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.
    24. Banerjee, Abhijit V & Newman, Andrew F, 1994. "Poverty, Incentives, and Development," American Economic Review, American Economic Association, vol. 84(2), pages 211-215, May.
    25. Ethan Ligon, 2002. "Targeting and Informal Insurance," WIDER Working Paper Series DP2002-08, World Institute for Development Economic Research (UNU-WIDER).
    26. Travis J. Lybbert & Christopher B. Barrett & Solomon Desta & D. Layne Coppock, 2004. "Stochastic wealth dynamics and risk management among a poor population," Economic Journal, Royal Economic Society, vol. 114(498), pages 750-777, October.
    27. Tewodaj Mogues & Michael Carter, 2005. "Social capital and the reproduction of economic inequality in polarized societies," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 3(3), pages 193-219, December.
    28. Abhijit Banarjee, 2000. "The Two Poverties," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 26, pages 129-141.
    29. K. J. Arrow, 1964. "The Role of Securities in the Optimal Allocation of Risk-bearing," Review of Economic Studies, Oxford University Press, vol. 31(2), pages 91-96.
    30. 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.
    31. Danny Quah, 1997. "Empirics for Growth and Distribution," CEP Discussion Papers dp0324, Centre for Economic Performance, LSE.
    32. Quah, Danny, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," CEPR Discussion Papers 1586, C.E.P.R. Discussion Papers.
    33. Garance Genicot & Debraj Ray, 2003. "Group Formation in Risk-Sharing Arrangements," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 87-113.
    34. Cohen-Cole, Ethan B. & Durlauf, Steven N. & Rondina, Giacomo, 2012. "Nonlinearities in growth: From evidence to policy," Journal of Macroeconomics, Elsevier, vol. 34(1), pages 42-58.
    35. John Hoddinott, 2006. "Shocks and their consequences across and within households in Rural Zimbabwe," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 301-321.
    36. Michelle Adato & Michael Carter & Julian May, 2006. "Exploring poverty traps and social exclusion in South Africa using qualitative and quantitative data," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 226-247.
    37. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September.
    38. Quah, Danny T, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," Journal of Economic Growth, Springer, vol. 2(1), pages 27-59, March.
    39. Costas Azariadis & Allan Drazen, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 501-526.
    40. John McPeak, 2004. "Contrasting income shocks with asset shocks: livestock sales in northern Kenya," Oxford Economic Papers, Oxford University Press, vol. 56(2), pages 263-284, April.
    41. Stefan Dercon & John Hoddinott, 2003. "Health, Shocks and Poverty Persistence," WIDER Working Paper Series DP2003-08, World Institute for Development Economic Research (UNU-WIDER).
    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. Jaramillo, Fernando & Kempf, Hubert & Moizeau, Fabien, 2015. "Heterogeneity and the formation of risk-sharing coalitions," Journal of Development Economics, Elsevier, vol. 114(C), pages 79-96.
    2. Sommarat Chantarat & Christopher Barrett, 2012. "Social network capital, economic mobility and poverty traps," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(3), pages 299-342, September.
    3. Giesbert, Lena & Schindler, Kati, 2012. "Assets, Shocks, and Poverty Traps in Rural Mozambique," World Development, Elsevier, vol. 40(8), pages 1594-1609.
    4. Barnett, Barry J. & Barrett, Christopher B. & Skees, Jerry R., 2008. "Poverty Traps and Index-Based Risk Transfer Products," World Development, Elsevier, vol. 36(10), pages 1766-1785, October.
    5. Bhattamishra, Ruchira & Barrett, Christopher B., 2010. "Community-Based Risk Management Arrangements: A Review," World Development, Elsevier, vol. 38(7), pages 923-932, July.
    6. Naschold, Felix, 2012. "“The Poor Stay Poor”: Household Asset Poverty Traps in Rural Semi-Arid India," World Development, Elsevier, vol. 40(10), pages 2033-2043.
    7. Orazio Attanasio & Britta Augsburg, 2016. "Subjective Expectations and Income Processes in Rural India," Economica, London School of Economics and Political Science, vol. 83(331), pages 416-442, July.
    8. Alain de JANVRY & Elisabeth SADOULET & Renos VAKIS, 2008. "Protecting Vulnerable Children from Uninsured Risks: Adapting Conditional Cash Transfer Programs to Provide Broader Safety Nets," Working Papers P04, FERDI.
    9. Lybbert, Travis J. & McPeak, John, 2012. "Risk and intertemporal substitution: Livestock portfolios and off-take among Kenyan pastoralists," Journal of Development Economics, Elsevier, vol. 97(2), pages 415-426.
    10. 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.
    11. Baird, Timothy D. & Gray, Clark L., 2014. "Livelihood Diversification and Shifting Social Networks of Exchange: A Social Network Transition?," World Development, Elsevier, vol. 60(C), pages 14-30.
    12. Jaimovich, Dany, 2011. "Macrostructure and microstructure: Evidence from overlapping village networks in The Gambia," MPRA Paper 38932, University Library of Munich, Germany.
    13. MARIEKE HUYSENTRUYT & CHRISTOPHER B. BARRETT & JOHN G. McPEAK, 2009. "Understanding Declining Mobility and Inter‐household Transfers among East African Pastoralists," Economica, London School of Economics and Political Science, vol. 76(302), pages 315-336, April.
    14. Barrett, Christopher B., 2006. "Food aid in response to acute food insecurity," ESA Working Papers 289057, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
    15. Takahashi, Kazushi, 2016. "Mobile Phone Expansion, Informal Risk Sharing, and Consumption Smoothing: Evidence from Rural Uganda," MPRA Paper 75135, University Library of Munich, Germany.
    16. Haider, Hamza, "undated". "Asset Management & Coping Strategies in Burkina Faso," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259956, Agricultural and Applied Economics Association.
    17. Giulia Malevolti, 2022. "Can weather shocks give rise to a poverty trap? Evidence from Nigeria," Working Papers - Economics wp2022_10.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Santos, Paulo & Barrett, Christopher B., 2011. "Persistent poverty and informal credit," Journal of Development Economics, Elsevier, vol. 96(2), pages 337-347, November.
    2. Sommarat Chantarat & Christopher Barrett, 2012. "Social network capital, economic mobility and poverty traps," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(3), pages 299-342, September.
    3. Barnett, Barry J. & Barrett, Christopher B. & Skees, Jerry R., 2008. "Poverty Traps and Index-Based Risk Transfer Products," World Development, Elsevier, vol. 36(10), pages 1766-1785, October.
    4. Letta, Marco & Montalbano, Pierluigi & Tol, Richard S.J., 2018. "Temperature shocks, short-term growth and poverty thresholds: Evidence from rural Tanzania," World Development, Elsevier, vol. 112(C), pages 13-32.
    5. Chih Ming Tan, 2010. "No one true path: uncovering the interplay between geography, institutions, and fractionalization in economic development," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 25(7), pages 1100-1127, November/.
    6. Carter, Michael R. & Little, Peter D. & Mogues, Tewodaj & Negatu, Workneh, 2007. "Poverty Traps and Natural Disasters in Ethiopia and Honduras," World Development, Elsevier, vol. 35(5), pages 835-856, May.
    7. Jaramillo, Fernando & Kempf, Hubert & Moizeau, Fabien, 2015. "Heterogeneity and the formation of risk-sharing coalitions," Journal of Development Economics, Elsevier, vol. 114(C), pages 79-96.
    8. Dylan Fitz & Shyam Gouri Suresh, 2021. "Poverty traps across levels of aggregation," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 16(4), pages 909-953, October.
    9. Naschold, Felix, 2016. "Getting ahead or falling behind? – The importance of households’ ability to manage idiosyncratic risk in rural Ghana," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235720, Agricultural and Applied Economics Association.
    10. Jakobsen, Kristian Thor, 2012. "In the Eye of the Storm—The Welfare Impacts of a Hurricane," World Development, Elsevier, vol. 40(12), pages 2578-2589.
    11. Michael Carter & Christopher Barrett, 2006. "The economics of poverty traps and persistent poverty: An asset-based approach," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 178-199.
    12. 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.
    13. McPeak, John, 2006. "Confronting the risk of asset loss: What role do livestock transfers in northern Kenya play?," Journal of Development Economics, Elsevier, vol. 81(2), pages 415-437, December.
    14. Steven N. Durlauf & Andros Kourtellos & Chih Ming Tan, 2008. "Empirics of Growth and Development," Chapters, in: Amitava Krishna Dutt & Jaime Ros (ed.), International Handbook of Development Economics, Volumes 1 & 2, volume 0, chapter 3, Edward Elgar Publishing.
    15. Nicholas Apergis & Christina Christou & Stephen Miller, 2012. "Convergence patterns in financial development: evidence from club convergence," Empirical Economics, Springer, vol. 43(3), pages 1011-1040, December.
    16. Paul Johnson & Chris Papageorgiou, 2020. "What Remains of Cross-Country Convergence?," Journal of Economic Literature, American Economic Association, vol. 58(1), pages 129-175, March.
    17. Andros Kourtellos, 2002. "Modeling Parameter Heterogeneity in Cross Country Growth Regression Models," University of Cyprus Working Papers in Economics 0212, University of Cyprus Department of Economics.
    18. Marco Alfo & Giovanni Trovato & Robert J. Waldmann, 2008. "Testing for country heterogeneity in growth models using a finite mixture approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(4), pages 487-514.
    19. Toni Mora, 2005. "Conditioning factors on regional European clubs - a distributional approach," ERSA conference papers ersa05p302, European Regional Science Association.
    20. Azomahou, Théophile T. & El ouardighi, Jalal & Nguyen-Van, Phu & Pham, Thi Kim Cuong, 2011. "Testing convergence of European regions: A semiparametric approach," Economic Modelling, Elsevier, vol. 28(3), pages 1202-1210, May.

    More about this item

    Keywords

    Risk and Uncertainty;

    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:ags:iaae06:25487. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/iaaeeea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.