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Propagation and Insurance in Village Networks

Author

Listed:
  • Cynthia Kinnan
  • Krislert Samphantharak
  • Robert Townsend
  • Diego A. Vera Cossio

Abstract

Firms in developing countries are embedded in supply chains and labor networks. These linkages may propagate or attenuate shocks. Using panel data from Thai villages, we document three facts: as households facing idiosyncratic shocks adjust their production, these shocks propagate to other households on both the production and consumption sides; propagation is greater via labor than supply chain links; and shocks in denser networks and to more central households propagate more, while access to formal or informal insurance reduces propagation. Social benefits from expanding safety nets may be higher than private benefits.

Suggested Citation

  • Cynthia Kinnan & Krislert Samphantharak & Robert Townsend & Diego A. Vera Cossio, 2020. "Propagation and Insurance in Village Networks," NBER Working Papers 28089, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28089
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    Cited by:

    1. Alexander Karaivanov & Benoit Mojon & Luiz Awazu Pereira da Silva & Robert M Townsend, 2023. "Digital safety nets: a roadmap," BIS Papers, Bank for International Settlements, number 139.

    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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