Insurance in extended family networks

Document type
Working Paper
Attanasio, Orazio; Meghir, Costas; Mommaerts, Corina
Institute for Fiscal Studies
Date of publication
11 July 2018
Families, Poverty Alleviation Welfare Benefits and Financial Inclusion
Social welfare
Material type

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This framework is based on a joint model of the stochastic process of income and the corresponding behaviour of consumption for an extended family group. Income evolves as a permanent transitory process, as in previous studies. However, this structure has been extended to distinguish between family-aggregate and purely idiosyncratic components of income. This distinction is meaningful for risk sharing, because the group can insure components of shocks that are idiosyncratic to its individual members but is not able to do so for components that are aggregate for the group, thus affecting all members.

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