Working Paper: NBER ID: w21059
Authors: Orazio Attanasio; Costas Meghir; Corina Mommaerts
Abstract: We investigate partial insurance and group risk sharing in extended family networks. Our approach is based on decomposing income shocks into group aggregate and idiosyncratic components, allowing us to measure the extent to which each component is insured. We apply our framework to extended family networks in the United States by exploiting the unique intergenerational structure of the Panel Study of Income Dynamics. We find that over 60% of shocks to household income are potentially insurable within extended family networks. However, we find little evidence that the extended family provides insurance for such idiosyncratic shocks.
Keywords: extended family; risk sharing; insurance; income shocks
JEL Codes: D12; D31; D91; E21; E24; H31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| structure of income shocks (E25) | consumption responses within extended families (D19) |
| idiosyncratic shocks (D89) | consumption (E21) |
| public welfare programs (I38) | role of extended families in providing insurance (G52) |
| barriers (stigma, transaction costs, imperfect information) (D82) | actual insurance provided by extended families (G52) |