| Popis: |
Given the importance of agricultural income for rural households, erratic weather conditions pose an austere threat to these households' livelihoods. This thesis explores ways through which households in agrarian economies smooth their consumption, engage in community networks, and readjust their labour allocation in response to shocks. In a setting of inherent risk, absence of institutional insurance, and labour market inefficiencies, poor households are often left to their own devices to cope with risk. The aim of this study is to examine the different risk-coping strategies adopted by households in rural India, assess their effectiveness, and derive implications for public policy. The results suggest that, in an environment characterised by agro-climatic risk, households are able to self-insure and smooth their consumption in the face of income shocks. Their coping mechanisms, however, may reduce their resilience to future shocks. In fact, small landholders tend to rely more heavily on their productive asset stock, while medium landholders find it optimal to preserve and accumulate their productive assets when exposed to exogenous income shocks. Households also change their labour allocation and reduce their self-employment in agriculture. Furthermore, households in rural areas can migrate to urban areas or engage in societal risk-sharing arrangements to mitigate the risk. The results of this thesis suggest that being part of a community network discourages individuals' migration and increases the likelihood of undertaking riskier activities. The findings also confirm the importance of portfolio adjustments and the diversification of household assets in buffering consumption. These conclusions form the basis of several policy implications, the most important of which is providing formal insurance schemes to encourage the accumulation of assets, technology, and skills. |
