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Are the poor more vulnerable to income shocks? An analysis of consumption insurance in rural India

Maitra, Pushkar

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This paper examines the extent of consumption insurance against income risk by households in rural India. We estimate the effects of income changes on consumption after controlling for aggregate shocks through changes in village level consumption and household size. We also test whether there is a systematic wealth effect on the extent of consumption insurance against idiosyncratic income shocks by classifying the households on the basis of landholding, which is the primary...[Show more]

dc.contributor.authorMaitra, Pushkar
dc.coverage.spatialANU, Canberra, Australia
dc.coverage.temporalNovember 19-20, 2001
dc.date.accessioned2003-07-22
dc.date.accessioned2004-05-19T07:43:45Z
dc.date.accessioned2011-01-05T08:25:17Z
dc.date.available2004-05-19T07:43:45Z
dc.date.available2011-01-05T08:25:17Z
dc.date.created2001
dc.identifier.urihttp://hdl.handle.net/1885/40332
dc.identifier.urihttp://digitalcollections.anu.edu.au/handle/1885/40332
dc.description.abstractThis paper examines the extent of consumption insurance against income risk by households in rural India. We estimate the effects of income changes on consumption after controlling for aggregate shocks through changes in village level consumption and household size. We also test whether there is a systematic wealth effect on the extent of consumption insurance against idiosyncratic income shocks by classifying the households on the basis of landholding, which is the primary source of wealth for rural households in India. The null hypothesis of full insurance is rejected both for the population as a whole and for the different land classes. Our estimation results also show that consumption tracks income more closely for the poorer households - the estimated marginal propensity to consume out of idiosyncratic changes in income is significantly higher for the poorer households compared to the richer households. The results are robust to alternative estimation methodologies and alternative methods of sample stratification.
dc.format.extent125687 bytes
dc.format.extent356 bytes
dc.format.mimetypeapplication/pdf
dc.format.mimetypeapplication/octet-stream
dc.language.isoen_AU
dc.publisherASARC
dc.relation.ispartofseriesExamining ten years of economic reforms in India
dc.subjectconsumption smoothing
dc.subjectrisk
dc.subjectinsurance
dc.subjectrural India
dc.titleAre the poor more vulnerable to income shocks? An analysis of consumption insurance in rural India
dc.typeConference paper
local.description.refereedno
local.identifier.citationyear2001
local.identifier.eprintid1749
local.rights.ispublishedyes
dc.date.issued2001
CollectionsANU Research Publications

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