Vulnerability of Household Consumption to Village-level Aggregate Shocks in a Developing Country
Village-level aggregate shocks such as droughts and floods cannot be perfectly insured by risk sharing within a village. Then, what type of households are more vulnerable in terms of a decline in consumption when a village is hit by such natural disasters? This question is investigated in this study by using two-period panel data for the years 2001 and 2004 from rural Pakistan. We propose a methodology to infer the theoretical mechanisms underlying the heterogeneity of households in terms of their vulnerability, and focus on the difference between the across-household-type difference in marginal response to aggregate shocks and that in marginal response to idiosyncratic shocks. The empirical results obtained indicate that the sensitivity of consumption changes to shocks differs across household types, depending on the type of natural disasters. Moreover, land and credit access are effective in mitigating the ill-effects of various types of shocks. Household heads who are educated or elderly and households with a greater number of working members bear a larger burden of the village-level shocks; however, they are not vulnerable to idiosyncratic health shocks. It is revealed that these patterns may be explained by the coexistence of unequal access to credit markets and risk sharing among heterogeneous households in terms of risk tolerance.
|Date of creation:||Feb 2011|
|Date of revision:|
|Contact details of provider:|| Postal: 2-1 Naka, Kunitachi City, Tokyo 186|
Web page: http://www.ier.hit-u.ac.jp/
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.:
- Sajeda Amin & Ashok S. Rai & Giorgio Topa, 1999.
"Does Microcredit Reach the Poor and Vulnerable? Evidence from Northern Bangladesh,"
CID Working Papers
28, Center for International Development at Harvard University.
- Amin, Sajeda & Rai, Ashok S. & Topa, Giorgio, 2003. "Does microcredit reach the poor and vulnerable? Evidence from northern Bangladesh," Journal of Development Economics, Elsevier, vol. 70(1), pages 59-82, February.
- Amin, S. & Rai, A.S. & Topa, G., 1999. "Does Microcredit Reach the Poor and Vulnerable? Evidence from Northern Bangldesh," Working Papers 99-06, C.V. Starr Center for Applied Economics, New York University.
- Amin, S. & Rai, A.S. & Topa, G., 2000. "Does Microcredit Reach the Poor and Vulnerable? Evidence from Nothern Bangladesh," Papers 28, Chicago - Graduate School of Business.
- Jalan, Jyotsna & Ravallion, Martin, 1997.
"Are the poor less well-insured? Evidence on vulnerability to income risk in rural China,"
Policy Research Working Paper Series
1863, The World Bank.
- Jalan, Jyotsna & Ravallion, Martin, 1999. "Are the poor less well insured? Evidence on vulnerability to income risk in rural China," Journal of Development Economics, Elsevier, vol. 58(1), pages 61-81, February.
- Pierfederico Asdrubali & Soyoung Kim, 2005.
"Incomplete Intertemporal Consumption Smoothing and Incomplete Risksharing,"
- Pierfederico Asdrubali & Soyoung Kim, 2008. "Incomplete Intertemporal Consumption Smoothing and Incomplete Risk Sharing," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(7), pages 1521-1531, October.
- Pierfederico Asdrubali & Soyoung Kim, 2007. "Incomplete Intertemporal Consumption Smoothing and Incomplete Risksharing," Discussion Paper Series 0725, Institute of Economic Research, Korea University.
- Ethan Ligon & Jonathan P. Thomas & Tim Worrall, 1998.
"Mutual Insurance, Individual Savings and Limited Commitment,"
Keele Department of Economics Discussion Papers (1995-2001)
98/14, Department of Economics, Keele University.
- Ethan Ligon & Jonathan P. Thomas & Tim Worrall, 2000. "Mutual Insurance, Individual Savings and Limited Commitment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(2), pages 216-246, April.
- Sawada, Yasuyuki, 2006.
"The Impact of Natural and Manmade Disasters on Household Welfare,"
2006 Annual Meeting, August 12-18, 2006, Queensland, Australia
25750, International Association of Agricultural Economists.
- Yasuyuki Sawada, 2007. "The impact of natural and manmade disasters on household welfare," Agricultural Economics, International Association of Agricultural Economists, vol. 37(s1), pages 59-73, December.
- Cesar Calvo & Stefan Dercon, 2005. "Measuring Individual Vulnerability," Economics Series Working Papers 229, University of Oxford, Department of Economics.
- Glewwe, Paul & Hall, Gillette, 1998. "Are some groups more vulnerable to macroeconomic shocks than others? Hypothesis tests based on panel data from Peru," Journal of Development Economics, Elsevier, vol. 56(1), pages 181-206, June.
- G. M. Arif & Faiz Bilquees, 2006.
"Chronic and Transitory Poverty in Pakistan: Evidence from a Longitudinal Household Survey,"
MIMAP Technical Paper Series
2006:19, Pakistan Institute of Development Economics.
- G. M. Arif & Faiz Bilquees, 2007. "Chronic and Transitory Poverty in Pakistan: Evidence from a Longitudinal Household Survey," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(2), pages 111-127.
- Skoufias, Emmanuel & Quisumbing, Agnes R., 2004. "Consumption insurance and vulnerability to poverty : a synthesis of the evidence from Bangladesh, Ethiopia, Mali, Mexico and Russia," Social Protection and Labor Policy and Technical Notes 29141, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:hit:primdp:8. 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: (Digital Resources Section, Hitotsubashi University Library)
If references are entirely missing, you can add them using this form.