Insurance in Extended Family Networks

60 Pages Posted: 16 Jul 2018

See all articles by Orazio Attanasio

Orazio Attanasio

Dept of Economics Yale University; Institute for Fiscal Studies (IFS); University College London - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Costas Meghir

Yale University; Yale University - Cowles Foundation; Institute for Fiscal Studies (IFS); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Corina Mommaerts

University of Wisconsin - Madison - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: June 13, 2018

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: Incomplete markets, Partial Insurance, Consumption smoothing, Extended Family Networks, Savings, Intergenerational transfers, Stochastic income processes

JEL Classification: D12, D31, D91, E21, E24, H31

Suggested Citation

Attanasio, Orazio and Meghir, Costas and Mommaerts, Corina, Insurance in Extended Family Networks (June 13, 2018). Cowles Foundation Discussion Paper No. 1996R, Available at SSRN: https://ssrn.com/abstract=3206754 or http://dx.doi.org/10.2139/ssrn.3206754

Orazio Attanasio

Dept of Economics Yale University ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

Institute for Fiscal Studies (IFS)

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University College London - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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Costas Meghir (Contact Author)

Yale University ( email )

37 Hillhouse avenue
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+12034323558 (Phone)

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Corina Mommaerts

University of Wisconsin - Madison - Department of Economics ( email )

William H. Sewell Social Science Building
1180 Observatory Drive
Madison, WI 53706-1393
United States

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