Risk sharing within the extended family: Evidence from the Indonesia family life survey

Firman Witoelar*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

10 Citations (Scopus)

Abstract

The article focuses on consumption risk sharing within extended families. Coupled with the concern that dropping split-off households may nonrandomly exclude particular subgroups of the sample, the option of creating a panel of only original households seems unappealing. Creating a panel of extended families, however, implies that the extended family acts as if it is a single household, or to put it differently, that household decisions are made at the extended family level. The majority of the households in developing countries depend on the agricultural sector, where variability in income is high. The lack of a social security system and the absence of a complete financial and insurance market may cause households in these countries to rely on interhousehold informal arrangements as a way to smooth their consumption. It is therefore reasonable to believe that extended families may play a larger role in developing countries than they do in developed countries.

Original languageEnglish
Pages (from-to)65-94
Number of pages30
JournalEconomic Development and Cultural Change
Volume62
Issue number1
DOIs
Publication statusPublished - Oct 2013
Externally publishedYes

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