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Covariate and Idiosyncratic Shocks and Coping Strategies for Poor and Non-poor Rural Households in India

Author

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  • Kailash Chandra Pradhan

    (Joint Director, National Institute of Labour Economics Research and Development (NILERD), NITI Aayog, Govt. of India.)

  • Shrabani Mukherjee

    (Madras School of Economics)

Abstract
A probit analysis estimates the relationship between different shocks and their corresponding choices of coping actions for poor and non-poor rural households using data set from Additional Rural Incomes Survey/Rural Economic and Demographic Survey (ARIS/REDS) surveys of National Council of Applied Economic Research (NCAER) from rural India across 17 states. Both poor and non-poor households experience the covariate and idiosyncratic shocks and take the coping strategies differently. Regarding types of coping measure, asking for remittances from relatives, taking on public support programs, reallocating household resources, borrowing from formal and informal sources, using savings and selling assets are dominant. Extremely poor starve to mange distress of sudden shocks. Local governance and welfare programs provided by Rural Local Bodies fail to control the starving for poor households during the idiosyncratic shocks. Households’ education plays significant role in adopting appropriate coping strategies depending on nature of shocks. Repeated sequence of same kind of shocks brings out the scope of chronic poverty and vulnerability.

Suggested Citation

  • Kailash Chandra Pradhan & Shrabani Mukherjee, 2016. "Covariate and Idiosyncratic Shocks and Coping Strategies for Poor and Non-poor Rural Households in India," Working Papers 2016-139, Madras School of Economics,Chennai,India.
    • Handle: RePEc:mad:wpaper:2016-139
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    References listed on IDEAS

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    2. Amina Ika Micah, 2022. "Three essays on access to credit and financial shock in Nigeria," Economics PhD Theses 0422, Department of Economics, University of Sussex Business School.
    3. Santoso, Rokhedi Priyo & Sriyana, Jaka, 2020. "The Effect of Idiosyncratic Shocks on Labor Market Outcomes of Informal Households in Indonesia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 54(2), pages 13-27.
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    7. Mulungu, Kelvin & Kilimani, Nicholas, 2023. "Does forest access reduce reliance on costly shock-coping strategies? Evidence from Malawi," Ecological Economics, Elsevier, vol. 209(C).
    8. Duy Linh Nguyen & Trung Thanh Nguyen & Ulrike Grote, 2023. "Shocks, household consumption, and livelihood diversification: a comparative evidence from panel data in rural Thailand and Vietnam," Economic Change and Restructuring, Springer, vol. 56(5), pages 3223-3255, October.
    9. Victoria Kudaisi, Bosede & Akanni Olomola, Philip, 2021. "Effects Of Income Shock On Consumption Among Public Workers In Southwest Nigeria: Evidence From The 2016-2018 Economic Crisis," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 8(2), pages 65-88, June.
    10. Davide Bazzana & Aidin Mobasser & Sergio Vergalli, 2022. "Less Water, Less Oil: Policy Response for the Kenyan Future, a CGE Analysis," Sustainability, MDPI, vol. 14(18), pages 1-26, September.
    11. d’Errico, Marco & Pinay, Jeanne & Luu, Anh & Jumbe, Ellestina, "undated". "Drivers and stressors of resilience to food insecurity – Evidence from 35 countries," ESA Working Papers 319839, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).

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    More about this item

    Keywords

    Rural Households; Shocks; Coping Strategies; Poverty; Probit Model;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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