How do the poor cope with hardships when mutual assistance is unavailable?

Masahiro Shoji ()
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Masahiro Shoji: University of Tokyo

Economics Bulletin, 2008, vol. 15, issue 13, pages 1-17

Abstract: This paper investigates how risk coping strategies differ between idiosyncratic and covariate income shocks using evidence from a nation-wide flood in Bangladesh. It is found that availability of coping strategies significantly depends on the covariate-idiosyncratic characteristic of shocks. The main strategies for idiosyncratic and moderate covariate shocks are interest-free informal credit and additional labor supply for fishing, but they are not utilized to cope with the severe covariate shocks. Instead, people must resort to borrowing with high interest as a last resort.

Keywords: Risk coping strategy; Consumption smoothing; Covariate shocks; South Asia (search for similar items in EconPapers)
JEL-codes: O1 E2 (search for similar items in EconPapers)
Date: 2008-07-26

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Persistent link: http://EconPapers.repec.org/RePEc:ebl:ecbull:v:15:y:2008:i:13:p:1-17

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