Mobile Phone Expansion, Informal Risk Sharing, and Consumption Smoothing: Evidence from Rural Uganda

Kazushi Takahashi

MPRA Paper from University Library of Munich, Germany

Abstract: We study how the recent expansion of mobile phone coverage affects the degree of consumption smoothing using data collected in rural Uganda in 2003 and 2005. We found that mobile phone coverage helps consumption smoothing against covariate shocks but not idiosyncratic shocks. Unlike in studies on informal risk sharing, but in line with the permanent income hypothesis, we also found that household-level consumption changes are insenitive to transitory household income shocks, but sensitive to permanent household income shocks. Full intertemporal self-insurance is, however, impossible under imperfect credit and insurance markets. Our results show that households effectively combine self-insurance, local risk sharing, and long-distance risk sharing via mobile phone, where idiosyncratic shocks are partially mitigated by self-insurance as well as mutual insurance within local communities, while covariate shocks are partially mitigated by self-insurance and across distant communities via mobile phones.

Keywords: risk sharing; mobile phone network; consumption smoothing; Uganda (search for similar items in EconPapers)
JEL-codes: D81 D85 O17 (search for similar items in EconPapers)
Date: 2016-11-18
New Economics Papers: this item is included in nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/75135/1/MPRA_paper_75135.pdf original version (application/pdf)

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:pra:mprapa:75135

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().