Labor risk sharing

In this paper we aim to test the extent of labor risk sharing exists in thai village economies. Specifically we test the null hypothesis of full risk sharing at the village level. We outline a simple planner's problem that motivates our empirical specification. Our empirical specification consists of two equations, a labor supply equation that determines how many hours you work conditional on participating in the labor market, and a selection equation which determines the probability of working positive hours. Our empirical specification allows for fixed effects that correspond to different Pareto weights for the agents. Our dataset, an unusually long panel survey spanning over 160 months conducted in 16 villages in Thailand, allows us to deal with these fixed effects. Our results lead us to reject the null of full risk sharing since non-labor income has a significant negative effect on participation. In most specifications it also has a significant but small negative effect on hours worked conditional on participation. In light of these results we reject the null of full risk sharing.

Department dc:contributor.department

Massachusetts Institute of Technology. Department of Economics.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2015

Author dc:creator

• Manuelli, Lucas

Advisor dc:contributor.advisor

• Ivan Werning.

• Economics.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/101520

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/101520