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Families, Insurance and Employment in Developing Agricultural Economies


  • St-Amour, Pascal


  • Vencatachellum, Desire


This paper studies the impact of families on sectoral labor allocation in developing agricultural economies. In an overlapping generations framework, we equate a family to a contingent-claims contract. Families are endogenous by design. A risk-averse adult facing possible unemployment may be insured by a less risk-averse elder. Similarly, a risk-averse elder may purchase crop failure insurance from a less risk-averse adult. The family is the unique provider of insurance services yielding positive expected insurance rent. A monopsonist landlord extracts this expected rent through state-contingent tenancy contracts. When unemployment insurance contracts are expensive to enforce, families do not exist if the adult is weakly risk-averse and unemployment risk is too high or too low This `family switching' property is internalized by the landlord, such that family organization alters the relative price of unskilled laborers, paid a fixed wage, and skilled sharecroppers to whom contingent tenancy contracts are offered. Our results indicate that families affect total employment and can yield multiple steady- state equilibria.

Suggested Citation

  • St-Amour, Pascal & Vencatachellum, Desire, 1997. "Families, Insurance and Employment in Developing Agricultural Economies," Cahiers de recherche 9703, Université Laval - Département d'économique.
  • Handle: RePEc:lvl:laeccr:9703

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    Employment; Family; Insurance; Inter-Generational Transfers; Intra-Household Transfers; Sharecropping.;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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