How do rural households respond to economic shocks? Insights from hierarchical analysis using global data
Unanticipated events can cause considerable economic hardship for poor rural households. Some types of negative shocks, for example weather-related agricultural losses and vector-borne diseases, are expected to occur more frequently as a result of climate change. This paper measures the role of household- and location-specific characteristics in conditioning behavioral responses to idiosyncratic and covariate shocks. We use data from more than 8000 households in 25 developing countries, compiled in the global database of the Poverty Environment Network (PEN). We employ a hierarchical multinomial logit model to identify the importance of characteristics observed at different levels of aggregation on a set of responses to economic shocks. Results indicate that in response to idiosyncratic shocks, households tend to deplete financial and durable assets, whereas covariate shocks predominantly result in reduced consumption. Households in sites characterized by high asset wealth tend to respond to shocks more proactively than in sites with average or below average asset wealth; savings emerge as an important determinant of shock response behavior at the household level. We also find that a higher concentration of land ownership at the village level reduces the prevalence of natural resource-based coping strategies. Overall, rural households are less reliant on natural resource extraction for coping than expected from the case-study literature. Our findings have implications for rural development and climate change adaptation strategies.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.iaae-agecon.org/|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- D. McFadden & J. Hausman, 1981.
"Specification Tests for the Multinominal Logit Model,"
292, Massachusetts Institute of Technology (MIT), Department of Economics.
- Hausman, Jerry & McFadden, Daniel, 1984. "Specification Tests for the Multinomial Logit Model," Econometrica, Econometric Society, vol. 52(5), pages 1219-40, September.
- Subhrendu K. Pattanayak & Erin O. Sills, 2001. "Do Tropical Forests Provide Natural Insurance? The Microeconomics of Non-Timber Forest Product Collection in the Brazilian Amazon," Land Economics, University of Wisconsin Press, vol. 77(4), pages 595-612.
- Hedeker, Donald, 1999. "MIXNO: a computer program for mixed-effects nominal logistic regression," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 4(i05).
- Zimmerman, Frederick J. & Carter, Michael R., 2003.
"Asset smoothing, consumption smoothing and the reproduction of inequality under risk and subsistence constraints,"
Journal of Development Economics,
Elsevier, vol. 71(2), pages 233-260, August.
- Frederic Zimmerman & MICHAEL R. CARTER, . "Asset Smoothing, Consumption Smoothing and the Reproduction for Inequality under Risk and Subsistence Constraints," Wisconsin-Madison Agricultural and Applied Economics Staff Papers 402, Wisconsin-Madison Agricultural and Applied Economics Department.
- Elaina Rose, 1999. "Consumption Smoothing and Excess Female Mortality in Rural India," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 41-49, February.
- Beegle, Kathleen & Dehejia, Rajeev H. & Gatti, Roberta, 2006. "Child labor and agricultural shocks," Journal of Development Economics, Elsevier, vol. 81(1), pages 80-96, October.
- Martin Ravallion & Shaohua Chen & Prem Sangraula, 2007.
"New Evidence on the Urbanization of Global Poverty,"
Population and Development Review,
The Population Council, Inc., vol. 33(4), pages 667-701.
- Ravallion, Martin & Chen, Shaohua & Sangraula, Prem, 2007. "New evidence on the urbanization of global poverty," Policy Research Working Paper Series 4199, The World Bank.
- Fisher, Monica & Shively, Gerald, 2005. "Can Income Programs Reduce Tropical Forest Pressure? Income Shocks and Forest Use in Malawi," World Development, Elsevier, vol. 33(7), pages 1115-1128, July.
- Patrick S. Ward & Raymond J. G. M. Florax & Alfonso Flores-Lagunes, 2014. "Climate change and agricultural productivity in Sub-Saharan Africa: a spatial sample selection model," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 41(2), pages 199-226.
- Frank Ellis, 1998. "Household strategies and rural livelihood diversification," Journal of Development Studies, Taylor & Francis Journals, vol. 35(1), pages 1-38.
- Pender, John L., 1996. "Discount rates and credit markets: Theory and evidence from rural india," Journal of Development Economics, Elsevier, vol. 50(2), pages 257-296, August.
- Giné, Xavier, 2011. "Access to capital in rural Thailand: An estimated model of formal vs. informal credit," Journal of Development Economics, Elsevier, vol. 96(1), pages 16-29, September.
- Leonardo Grilli & Carla Rampichini, 2007. "A multilevel multinomial logit model for the analysis of graduates’ skills," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 16(3), pages 381-393, November.
- Rose, Elaina, 2001. "Ex ante and ex post labor supply response to risk in a low-income area," Journal of Development Economics, Elsevier, vol. 64(2), pages 371-388, April.
When requesting a correction, please mention this item's handle: RePEc:ags:iaae12:126143. 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: (AgEcon Search)
If references are entirely missing, you can add them using this form.