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Changes in household composition as a shock-mitigating strategy

  • Kseniya Abanokova

    ()

    (National Research University Higher School of Economics (Moscow, Russia).)

  • Michael Lokshin

    ()

    (World Bank and National Research University Higher School of Economics (Moscow, Russia). “Centre for Labour Market Studies (CLMS)”)

This paper uses data from the Russian Longitudinal Survey that span the two recent economic recessions of 1998 and 2008 to study the effect of declining incomes on household composition. We hypothesize that individuals face a tradeoff between taking advantages of economies of scale and specialization when living with others and individual privacy. Consumption smoothing is achieved by forgoing privacy during a crisis and results in an increase in household size. Our empirical results suggest that members of the households that experienced negative income shocks are more likely to move in with others than households whose income remained the same or increased.

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File URL: http://www.hse.ru/data/2013/11/08/1282031759/38EC2013.pdf
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Paper provided by National Research University Higher School of Economics in its series HSE Working papers with number WP BRP 38/EC/2013.

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Length: 20 pages
Date of creation: 2013
Date of revision:
Publication status: Published in WP BRP Series: Economics / EC, November 2013, pages 1-20
Handle: RePEc:hig:wpaper:38/ec/2013
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