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.
|Date of creation:||01 Oct 2009|
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