Coping with economic shocks: Consumption Smoothing and the 1998 Russian Financial Crisis

Applying quantile regression techniques to Russian data we investigate the channels through which individuals experience changes in their well being. We find that married individuals in non-rural households with university-educated heads are less vulnerable to severe welfare shocks. For the most vulnerable individuals the labour market plays a key role in transmitting the effects of aggregate shocks through the unemployment channel whereas those individuals able to maintain their employment status are more able to cope with economic shocks. While increases in pension payments help individuals to cope with shocks, it transpires that vulnerable individuals rely more broadly on the support of relatives and the produce of their garden plots and dachas

Consumption smoothing and vunerability in Russia

Applying bootstrapped quantile regression to the Russian Longitudinal Monitoring Survey (RLMS) data, we examine the channels through which individuals experience and seek to cope with changes in consumption. We find that married individuals living in small households, with educated heads in urban areas are better equipped to smooth consumption. Investigating the impact of idiosyncratic shocks, we find that the labour market is an important transmission mechanism allowing households to smooth their consumption but also exposing them to risk, mainly through job loss. Outside of pension payments the formal social safety net does not facilitate consumption smoothing, thus heightening the importance of informal coping institutions. It transpires that both support from relatives/friends and home production act as important insurance mechanisms for the most vulnerable

Consumption Smoothing and Vulnerability in Russia

Applying bootstrapped quantile regression to the Russian Longitudinal Monitoring Survey (RLMS) data, we examine the channels through which individuals experience and seek to cope with changes in consumption. We find that married individuals living in small households, with educated heads in urban areas are better equipped to smooth consumption. Investigating the impact of idiosyncratic shocks, we find that the labour market is an important transmission mechanism allowing households to smooth their consumption but also exposing them to risk, mainly through job loss. Outside of pension payments the formal social safety net does not facilitate consumption smoothing, thus heightening the importance of informal coping institutions. It transpires that both support from relatives/friends and home production act as important insurance mechanisms for the most vulnerable.http://deepblue.lib.umich.edu/bitstream/2027.42/64415/1/wp885.pd

Why rising tides dont lift all boats? An explanation of the relationship between poverty and unemployment in Britain

Abstract: This paper is motivated by the lack of any obvious relationship between aggregate poverty and unemployment in Great Britain. We derive a framework based on individuals' risks of unemployment and poverty, and how these vary over the economic cycle. Analysing the British Household Panel Survey for 1991-96, we are able to square the micro evidence - that unemployment matters for poverty - with the macro picture - that there's no strong link. We then go on to identify which household and individual characteristics are associated with whether an individual's poverty risk is vulnerable to the economic cycle.Poverty, unemployment, economic cycle

Rural vulnerability in Serbia

In the presence of risk and uncertainty, measures such as poverty rates are inadequate to analyze the well-being of poor households. The poor are not only concerned about the current low levels of their income or consumption, but also the likelihood of experiencing stressful declines in these levels in the future. Risks to livelihood are particularly important in rural areas where there is generally high dependence on agriculture and the environment. In this study, the author analyzes the nature, extent, and causes of rural vulnerability in Serbia using panel national household data from the 2002 and 2003 Serbia Living Standard Surveys. He measures rural vulnerability as a function of nonstochastic determinants of poverty as well as exposure to risk. While low levels of consumption (poverty) explain about 70 percent of vulnerability, the author identifies risk and uncertainty as crucial dimensions of rural life in accounting for the remaining 30 percent of household vulnerability. Households and regions with a greater share of their livelihood depending on agricultural activities are more at risk of vulnerability than those with a significantly higher share of their income coming from nonagricultural sources. Dependence on agricultural income is directly associated with higher aggregate risk, underscoring the agricultural sector's lopsided exposure to covariate shocks in general, and the negative impact of the 2003 drought in particular. Rural vulnerability to poverty and risk is also strongly associated with asset ownership and access to markets to mobilize them in time of need.Rural Poverty Reduction,Population Policies,Achieving Shared Growth,Services&Transfers to Poor

Vulnerability, Unemployment and Poverty: A Class of Distribution and Sensitive Measures, Its Axiomatic Properties and Applications

Measures of unemployment and poverty have tended to focus solely on those currently unemployed or below the poverty line. This approach has ignored the members of society that are vulnerable to becoming unemployed or falling into poverty. Current literature in this area has implicitly assumed that since someone who is vulnerable experiences pain from the chance of becoming unemployed or falling into poverty, our standard measures of unemployment and poverty do not accurately account for this pain. The implication is that vulnerability is a `bad' and policies should aim to reduce the number of people who are vulnerable in a society. In this paper we argue that, at the macro level, vulnerability can be viewed as a �good� because, with unemployment remaining constant, the presence of vulnerable people implies that there must also exist currently unemployed people who expect to find work in the near future. And a society where unemployment is more equitably shared is better than a society where the burden of unemployment is carried by only a few. Given this view of vulnerability we then suggest a class of measures that, unlike the standard unemployment rate, account for the amount of vulnerability that exists in a society. We show some attractive axioms that our measure satisfies, fully characterize our measure and apply it to data from the U.S. and South Africa.

Measuring Vulnerability and Poverty: Estimates for Rural India

This paper measures the vulnerability of households in rural India, based upon the ICRISAT panel survey. We employ both ex ante and ex post measures of vulnerability. The latter are decomposed into aggregate and idiosyncratic risks and poverty components. Our decomposition shows that idiosyncratic risks account for the largest share, followed by poverty and aggregate risks. Despite some degree of risk-sharing, the landless or small farmers are vulnerable to idiosyncratic risks, forcing them to reduce consumption. Income augmenting policies therefore must be combined with those that not only reduce aggregate and idiosyncratic risks but also build resilience against them.aggregate risks, idiosyncratic risks, poverty, vulnerability, semi-arid conditions

Food Insecurity and Vulnerability in Latin America and the Caribbean

This paper examines how Latin American and Caribbean (LAC) nations have proceeded in addressing the issues of food insecurity and vulnerability in response to the 1996 Rome Declaration on World Food Security. The data suggests that while the food insecurity situation has improved in LAC over the past few years, many nations are worse off in terms of food insecurity than they were at the beginning of the 1990s. Nations that reduced food insecurity tend to be those who have effectively reduced poverty and have increased social spending. While some regional initiatives have occurred to address regional food insecurity issues, additional national and international policy responses are required in the Latin American Region.food insecurity, vulnerability, Latin America and the Caribbean, World Food Summit, Food Security and Poverty,

Chronic Poverty and All That: The Measurement of Poverty over Time

We explore how to measure poverty over time, by focusing on trajectories of poverty rather than poverty at a particular point in time. We consider welfare outcomes over a period in time, consisting of a number of spells. We offer a characterization of desirable properties for measuring poverty across these spells, as well as an explicit discussion of three issues. First, should there be scope for compensation so that a poor spell can be compensated for by a non-poor spell? Second, is there scope for discounting or should all spells be equally valued? Third, does the actual sequence of poor spells matter, for example whether they are consecutive or not? We offer a number of measures that implicitly offer different answers to these questions, in a world of certainty. Finally, we also offer an extension towards a forward-looking measure of vulnerability, defined as the threat of poverty over time, that incorporates risk. An application to data from Ethiopia shows that especially the assumption of compensation results in different inference on poverty.poverty, chronic poverty, poverty dynamics, Ethiopia

Vulnerability to poverty: An empirical comparison of alternative measures

The recent common feeling about a skyrocketing economic risk has drawn increasing attention to its role and consequences on individuals' welfare. In literature one of the concepts that aims to measure it is vulnerability to poverty, that is the probability, today, of being in poverty or to fall into deeper poverty in the future (The World Bank, 2011). This paper compares empirically the several measures of individual vulnerability proposed in the literature, in order to understand which is the best signal of poverty that can be used for policies purposes. To this aim the Receiver Operating Characteristic (ROC) curve, the Pearson and Spearman correlation coefficients are used as precision criteria. The results show that two groups of indexes can be identified, high- and low-performers, and, among the former, that proposed by Dutta et al. (2011) is the most precise.Poverty, Risk, Vulnerability, Receiver Operating Characteristic curve(ROC)