Risk, Implicit Contracts and the Family in Rural Areas of Low-Income Countries
In this paper the role of family structure in mitigating income volatility in the absence of income insurance in low-income agricultural environments is discussed. Hypotheses concerning the relationship between the membership, size and composition of households and insurance-based income transfers are tested using longitudinal data from India. A test is also performed of whether a household's ability to reduce risk ex post via family arrangements affects its willingness tobear risk ex ante through its selection of formal tenancy contracts. The results support these hypotheses concerning the risk-mitigating roles of both household structure and share contracts, and indicate as well the importance of heterogeneity in risk-aversion across households.
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- Barnum, Howard N. & Squire, Lyn, 1979. "An econometric application of the theory of the farm-household," Journal of Development Economics, Elsevier, vol. 6(1), pages 79-102, February.
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- Pollak, Robert A, 1985. "A Transaction Cost Approach to Families and Households," Journal of Economic Literature, American Economic Association, vol. 23(2), pages 581-608, June.
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