Distinguishing barriers to insurance in Thai villages

Cynthia Kinnan

No 831, Discussion Papers Series, Department of Economics, Tufts University from Department of Economics, Tufts University

Abstract: Informal insurance is an important risk-coping mechanism in developing countries, yet this risk sharing is incomplete. Models of limited commitment, moral hazard, and hidden income have been proposed to explain incomplete informal insurance. This paper shows that the way in which history matters in forecasting consumption can be used to distinguish hidden income from limited commitment and moral hazard. The paper also develops a non-parametric test, based on over-identifying restrictions, that can test across models in the presence of nonclassical measurement error and individual-level heterogeneity. In panel data from rural Thailand, limited commitment and moral hazard are rejected. The predictions of the hidden income model are supported by the data.

JEL-codes: D82 D91 O12 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-agr, nep-ias and nep-sea
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Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Distinguishing barriers to insurance in Thai villages (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:tuf:tuftec:0831

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