Household Responses to Adverse Income Shocks in Latin America

31 Pages Posted: 13 Jun 2001

See all articles by Alejandro Gaviria

Alejandro Gaviria

Universidad de los Andes, Colombia - Department of Economics

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Date Written: June 2001

Abstract

This paper uses a new data set to study household responses to adverse income shocks in seven Latin American countries. The results show (i) that households respond to income shocks mainly by increasing their labor force participation, selling assets, and disinvesting in human capital, (ii) that poor households are most likely to be affected by adverse income shocks, and (iii) that lower-middle class households are more likely to cut back human capital investments and moving abroad when faced with an adverse income shock. Taken together, these results offer ample justification for publicly funded safety nets targeted at the poor.

Suggested Citation

Gaviria, Alejandro, Household Responses to Adverse Income Shocks in Latin America (June 2001). Available at SSRN: https://ssrn.com/abstract=273276 or http://dx.doi.org/10.2139/ssrn.273276

Alejandro Gaviria (Contact Author)

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia

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