Inequality and Risk

Marcel Fafchamps

No DP2002-07, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: In poor societies, asset accumulation serves as insurance. It also opens the door to wider inequality. Many societies prohibit certain types of accumulation, such as land sales or indenture contracts. This paper investigates the theoretical relationship between risk sharing, asset accumulation, and long-term inequality. Scenarios with and without growth are contrasted. The paper also examines how asymmetric risk sharing (patronage) interacts with wealth accumulation to generate unequal distribution of assets and consumption while providing insurance to the poor.

Keywords: Equality and inequality; Insurance; Poverty; Risk management; Saving and investment (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (2)

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Working Paper: Inequality and Risk (2003)
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