Income Shock and Coping Strategies of Government Workers in Southwest Nigeria: Evidence from the Survey Data

Kudaisi Bosede Victoria
Additional contact information
Kudaisi Bosede Victoria: Department of Economics, Adekunle Ajasin University, Akungba, Ondo State, Nigeria

Timisoara Journal of Economics and Business, 2022, vol. 15, issue 1, 51-72

Abstract: Consumers’ response to income shock have been a source of concern over the years. Unexpected negative income shock, such as nonpayment of salaries, or salary reduction may cause an individual to react differently. Coping may be easy if an individual is well-prepared and has fully insured coping strategies prior to the income shock, hence, a negative income loss would have less impact. Otherwise, an income shock could be deleterious and leave an individual vulnerable. Therefore, ability to cope during negative income shock is determined by consumers’ preparedness as well as the effectiveness and appropriateness of available coping strategies. This study, therefore, examines the coping mechanisms of government employees in southwest Nigeria during the unexpected nonpayment of salary between 2015 and 2018. Both quantitative and qualitative methods using a structured questionnaire and FDGs are employed. The data is analyzed using descriptive statistics and OLS methods. The findings suggest that durable and service goods are substituted for food consumption, while the impact of coping strategies varies across the states. Empirical results from the OLS show that workers use personal savings and credit-purchases to smooth-out consumption, borrow and reallocate resources from durables and service for food consumption. Education, spouse occupation and age also have a positive impact on consumption. Evaluation of the coping strategies indicates that they are insufficient to satisfy the needs of the workers during the shock. The study, therefore, recommends that governments should provide a flexible working environment, formulate a policy that will allow workers to diversify into businesses, provide business loans and encourage mandatory saving for uncertainty.

Keywords: Income shock; Coping strategies; Consumption; Permanent income hypothesis; Nigeria (search for similar items in EconPapers)
JEL-codes: D12 E21 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.2478/tjeb-2022-0004 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vrs:timjeb:v:15:y:2022:i:1:p:51-72:n:1004

DOI: 10.2478/tjeb-2022-0004

Access Statistics for this article

Timisoara Journal of Economics and Business is currently edited by Mihaela Neamtu

More articles in Timisoara Journal of Economics and Business from Sciendo
Bibliographic data for series maintained by Peter Golla ().