Risk coping and starvation in rural China

Abstract

We use a 3-year panel from two poor provinces in Southern China to examine the nature of risks to which rural households are exposed and their ability to insure calorie consumption and spending of total consumption against idiosyncratic shocks to their income. We find that idiosyncratic risks are indeed the main source of income variation in the sample, consumption is better insured than total spending. Unlike total spending where full insurance is rejected in most cases, calorie intake is completely insured for both land-rich and land-poor households in both provinces. Access to even modest amounts of land significantly enhances households' ability to guard against total spending. Land-rich households are much better insured against total spending than land-poor households. The results are robust across model specifications although Generalized Method of Moments (GMM) estimations increase the magnitude of difference in total spending between the land-rich and the land-poor. Policies targeting poverty reduction and improving land use rights and land access to the poor could potentially improve the overall risk sharing ability of the rural poor.

Inverse Relationship Between Productivity and Farm Size: The Case of China

“…A bold conjecture is that China's potential to improve agricultural productivity may be realized if the fragmented land parcels can be consolidated into larger farms, where modern technologies can be easily applied. Deininger, Jin, and Yu (2007) found that access to land offers rural Chinese households protection against idiosyncratic risks. Deininger and Jin (2005) show that decentralized land rent markets might contribute to both equity and efficiency and have advantages over administrative reallocation.…”

Farming household food storage, consumption and sales decision making under price risk in northern Uganda

“…Moreover, precautionary food storage has been found to vary with income level of households (Jalan and Ravallion, 2001;Deininger et al, 2007;Carter and Lybbert, 2012; Michler and Balagtas, Ho: 2 = 3 = 4 = 0; ***and ** = significant at 1 and 5%, respectively. 2013).…”

“…Even when prices are anticipated to rise with a high level of certainty, such households still fail to store food to get arbitrage profits. Deininger et al (2007) argued that the concern for food security motivates household storage even when arbitrage is unlikely to insure food *Corresponding author. Email: Charles.Owach@fao.org.…”

“…Numerous studies have shown that precautionary food storage behavior of households differs by income level (Jalan and Ravallion, 2001;Deininger et al, 2007;Carter and Lybbert, 2012;Michler and Balagtas, 2013). Market supply, on the other hand, depends on the volume of grain harvest which is concentrated within a few months of the year in any area, and can fluctuate widely from one year to the next depending on climatic conditions (Park, 2006).…”

The importance of the savings device in precautionary savings: Empirical evidence from rural Bangladesh

“…An extensive literature exists regarding the value of precautionary storage of staple grains. In addition to its value as self‐insurance, staple grain storage provides households with a price hedge (Park, ) and helps ensure food security (Deininger et al., ; Renkow, ; Saha and Stroud, ). These examples of what Working () referred to as the convenience yield of grain storage suggest that the motivation for precautionary storage, and by extension the market failures that storage addresses, may be different from the motivation for other forms of precautionary savings.…”