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Projects - Details  
  Risk, Shocks, Growth and Poverty: Evidence from Long-Term Household Panel Data

Prof Stefan Dercon
University of Oxford

Prof Stefan Dercon
Department of International Development
University of Oxford
Mansfield Road

Tel: 01865 273622
email: stefan.dercon@economics.ox.ac.uk
web: www.economics.ox.ac.uk/members/stefan.dercon/research.HTM

Duration of Research
April 2005 - March 2008

This project will investigate the implications of imperfect credit and insurance markets on growth and poverty dynamics in developing countries using unique long-term panel data sets on households. Specifically, it will explore whether risk and shocks have persistent effects on poverty, through its impact on welfare levels, on asset and activity portfolios and on investment. It will examine the role played by existing institutional arrangements for credit and insurance, as well as safety nets and other possible risk-mitigation tools, to provide evidence on which institutions and mechanisms, including forms of intervention and financial market reform, could be most effective in supporting the poor to cope with risk.

Micro-level data suitable for this purpose are rare, requiring long-term panels of households on welfare outcomes, as well as on asset accumulation and investment behaviour. To conduct our analysis, we have access to suitable household level data from rural South India (7 rounds, 1979-2001), rural Ethiopia (7 rounds, 1989-2004) and Tanzania (5 rounds, 1991-2004). Collaborators of the researchers involved in this project, most notably at IFPRI and the World Bank, are involved in closely related work on Guatemala, Indonesia, Malawi and Peru, providing scope for a critical assessment of the evidence across different contexts.

The research will inform policy on the importance of insurance and credit markets in poverty alleviation. More specifically, if it were to be shown that risk and shocks have a persistent impact on poverty beyond the short-term humanitarian cost in terms of welfare fluctuations, the return to investing in financial services for the poor, including credit and insurance, would be substantially higher than often assumed.

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Last updated November 2005
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