Vulnerability to Poverty: A Microeconometric Approach and Application to the Republic of Haiti

This paper investigates vulnerability to poverty in Haiti. Research in vulnerability in developing countries has been scarce due to the high data requirements of vulnerability studies (e.g. panel or long series of cross-sections). The methodology adopted here allows the assessment of vulnerability to poverty by exploiting the short panel structure of nested data at different levels. The decomposition method reveals that vulnerability in Haiti is largely a rural phenomenon and that schooling correlates negatively with vulnerability. Most importantly, among the different shocks affecting household’s income, it is found that meso-level shocks are in general far more important than covariate shocks. This finding points to some interesting policy implications in decentralizing policies to alleviate vulnerability to poverty.vulnerability, poverty, hierarchical model, Republic of Haiti.

"Credit Crunches and Household Welfare: The Case of the Korean Financial Crisis"

The financial crisis in 1997 caused serious deterioration of the Korean economy. We examined the credit crunch in Korea and how it affected household welfare. With household panel data from 1996-1998, we estimated a switching regression model of a consumption Euler equation, which is augmented by endogenous credit constraints. Several empirical findings emerged. First, households coped with the negative shocks by reducing consumption of luxury items while maintaining food, education, and health-related expenditures. Second, the estimated results suggest that the standard consumption Euler equation, i.e., the necessary condition of the life-cycle permanent income hypothesis, does not hold because of binding credit constraints. Especially between 1997 and 1998, the probability of facing credit constraints increased significantly for all households. The expected welfare loss from binding credit constraints increased by 45% during the crisis, suggesting the seriousness of the credit crunch at the household level.

Vulnerability to poverty : A microeconometric approach and application to the Republic of Haiti

This paper investigates vulnerability to poverty in Haiti. Research in vulnerability in developing countries has been scarce due to the high data requirements of vulnerability studies (e.g. panel or long series of cross-sections). The methodology adopted here allows the assessment of vulnerability to poverty by exploiting the short panel structure of nested data at different levels. The decomposition method reveals that vulnerability in Haiti is largely a rural phenomenon and that schooling correlates negatively with vulnerability. Most importantly, among the different shocks affecting household's income, it is found that meso-level shocks are in general far more important than covariate shocks. This finding points to some interesting policy implications in decentralizing policies to alleviate vulnerability to poverty

Resilience building in vulnerable small states

Small states are characterised by their very high degree of economic openness, export concentration and dependence on strategic imports, such as fuel and food. These factors are associated with economic vulnerability, as they render a country highly exposed to the harmful effects of external shocks.1 In spite of such exposure, many small states register relatively high rates of GDP per capita. Briguglio (2004) has termed this reality “the Singapore paradox” referring to the possibility that a very vulnerable small country could actually be very successful economically. The present article argues that such a seeming contradiction can be explained by the juxtaposition of economic vulnerability and economic resilience.peer-reviewe

Did the Credit Crunch in Japan Affect Household Welfare? An Augmented Euler Equation Approach Using Type 5 Tobit Model

We investigate whether the credit crunch in Japan affected household welfare and the manner in which it did. We augment the theoretical framework of a consumption Euler equation with endogenous credit constraints and estimate it with household panel data for 1993-1999, generating several empirical findings. First, a small portion of the people faced credit constraints in Japan before and after the financial crisis in 1997. Accordingly, our results reject the standard consumption Euler equation. Second, the credit crunch affected household welfare negatively, albeit not seriously, after 1997. Our results corroborate that the credit crunch in Japan was supply-driven.

"Did the Credit Crunch in Japan Affect Household Welfare? An Augmented Euler Equation Approach Using Type 5 Tobit Model"

We investigate whether the credit crunch in Japan affected household welfare and the manner in which it did. We augment the theoretical framework of a consumption Euler equation with endogenous credit constraints and estimate it with household panel data for 1993-1999, generating several empirical findings. First, a small portion of the people faced credit constraints in Japan before and after the financial crisis in 1997. Accordingly, our results reject the standard consumption Euler equation. Second, the credit crunch affected household welfare negatively, albeit not seriously, after 1997. Our results corroborate that the credit crunch in Japan was supply-driven.

Poverty Vulnerability and Trade Policy: Are the Likely Impacts Discernable?

Trade policy reform prospects have generated debate about the impacts on poverty. Some critics assert that price changes induced by trade reform are minimal and may not be distinguishable from price fluctuations induced by other shocks to the global economy. This paper addresses this issue by developing an approach to assess whether poverty changes induced by trade reform can be statistically discernable, based on a comparison in the grains sector. Fluctuations in grains markets are implemented by incorporating stochastic simulations into a CGE model of the global economy. The resulting price distributions are inputted to a micro-simulation based on national household surveys. The conclusions are based on the comparison of the resulting poverty distributions from the weather-induced variability only, versus the combined effect of the latter and trade reform. Results indicate that, in this conservative approach of evaluating only the global grains markets, the short-run impacts on poverty of trade liberalization can not be distinguished from market volatility in some countries.International Relations/Trade,

Is Life More Risky in the Open? Household Risk-Coping and the Opening of China's Labor Markets

This paper looks at the effect of access to off-farm employment opportunities on household exposure to unexpected shocks originating in the agricultural economy. Farm households with improved access to both migrant and local labor markets are better able to cope with shocks to agricultural production. The risk-coping benefits of improved access to off-farm markets are not shared evenly within or across villages. Wealthier households show a more pronounced reduction in exposure to shocks, including less variable income and consumption, and a reduced impact of production shocks on expenditures related to the education of children.

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

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Not AvailableSundarban area of West Bengal State in India is a complex-diverse-risk prone agro-ecosystem grappled with degraded soil, water logging, brackish ground water and marginal farm holdings. South west monsoon rain-fed paddy crop is the major production system and the farm families have to migrate to other areas for employment during the post-monsoon season. Farm pond based rain water harvesting and optimally utilizing it to cultivate vegetables and rearing fish in the pond would provide them employment, income and self-reliance on a sustainable basis is the solution. Rain water harvesting based production system models namely, land shaping for aqua-agri integration, brackishwater pond based polyculture and paddy-cum-fish farming were implemented to 370 beneficiary families to enhance the livelihood security at Kakdwip and Namkhana blocks of South 24 Parganas district of West Bengal. A set of 15 indicators were identified by the subject matter scientists to assess the outcome of the interventions in enhancing the livelihood security of farm families. Impact analysis was done using ‘before vs after’ and control vs treatment research design. Primary data were collected from the sample of 120 proportionate random sample beneficiary farm families using a structured questionnaire and focus group meetings. The findings substantially indicated that all the three farming models have contributed for enhancing the livelihood security levels of the farm families in terms of creation of livelihood asset mainly the farm pond, conservation of natural water for multiple cropping and aquaculture, enhanced capabilities, employment generation, improved production from the land/pond, enhanced income from farming, access to better market price, access to development institutions, minimization of migration during off-season, enhanced self-reliant, and social status of the farm families. The analyses have confirmed that all the three farming models have significantly contributed for the livelihood security of the coastal farm families (p<0.01). Therefore, the study suggested that the Government may evolve a scheme with inbuilt subsidy in up-scaling these models in the entire Sundarban region for enhancing the livelihood security of farm families.Not Availabl