On consumption insurance in poor urban areas: Evidence from Ethiopia

Eskander Alvi and Seife Dendir
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Eskander Alvi: Department of Economics, Western Michigan University, Kalamazoo, Michigan, USA, Postal: Department of Economics, Western Michigan University, Kalamazoo, Michigan, USA
Seife Dendir: Department of Economics, Radford University, Radford, Virginia, USA, Postal: Department of Economics, Radford University, Radford, Virginia, USA

Journal of International Development, 2009, vol. 21, issue 5, 699-713

Abstract: This paper tests the full insurance and related hypotheses using data from urban households in Ethiopia. Whereas consumption insurance tests have focused on rural areas of developing countries, much less is known about the urban poor who remain precariously positioned in terms of consumption insurance-owing both to weak social bonding that undermines informal arrangements and thin formal insurance and financial markets. Results from OLS and GMM estimations provide evidence to this effect and show that full insurance is strongly rejected for various income and consumption categories even at the local level. The results do suggest however that partial insurance may be taking place though only among the most vulnerable. Copyright © 2008 John Wiley & Sons, Ltd.

Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jintdv:v:21:y:2009:i:5:p:699-713

DOI: 10.1002/jid.1505

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