Informal Risk-Sharing and Poverty Persistence
An old intuition suggests that poverty may perpetuate itself due to mild risk taking.� Risk-averse individuals remain in poverty while their more daring peers escape by means of high-return, high-risk activities.� As a growing literature increasingly highlights the role of insurance as a trigger for income-enhancing choices, several implications arise - informal risk-sharing agreements have found new attention, private microfinance and micro-insurance products have been promoted, and also public funds have been called to provide the poor with safety nets and thus encourage them into more entrepreneurial choices.
(This abstract was borrowed from another version of this item.)
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