Consumption Smoothing, Risk Sharing and Household Vulnerability in Rural Mexico

Naoko Uchiyama
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Naoko Uchiyama: Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan

No DP2016-06, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: This study empirically analyzes risk-sharing functioning in rural Mexico. It also aims to examine the vulnerability of rural households and whether the conditional cash transfer (CCT) program will reduce the vulnerability within the risk-sharing framework. I adopt the two most recent Mexican rural household panel data for 2003 and 2007—although rich in information, the data have not been fully utilized given the lack of pure control groups. Drawing on Townsend's (1994) risk sharing model, the empirical results reject the hypothesis of full risk sharing but confirm that risk-sharing functions serve better in securing basic needs such as food. In addition, the risk-sharing function, reinforced by longer exposures to the CCT program, serves to mitigate the liquidity constraints or vulnerability of poor households.

Keywords: Risk sharing; Household vulnerability; CCT (search for similar items in EconPapers)
JEL-codes: D12 O12 O54 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2016-02
New Economics Papers: this item is included in nep-agr and nep-dev
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