Changes in durable stocks, portfolio allocation, and consumption expenditure in the aftermath of the Kobe earthquake

To understand the household recovery process from unexpected serious damage caused by a natural disaster, we analyze household data from the Kobe earthquake in 1995. We address three questions—how damaged stocks of durable wealth are reinvested, how an ex post portfolio of borrowing or dissaving is reallocated to diversify the asset shocks caused by the disaster, and how formal and informal consumption insurance mechanisms are effective for amending home damage—all of which have been largely unanswered. We obtain three findings. First, people respond to negative income changes and housing damage by reinvesting damaged wealth. Second, households borrow extensively to amend the large housing damage caused by the earthquake. However, they dissave only for minor household asset damage. Third, consumption smoothing is not achieved for nondurable goods that are significantly affected by negative income changes and household asset damage. These findings suggest that asset shocks caused by a large natural disaster are not sufficiently diversified for households, indicating a large gap in designing effective insurance mechanisms.     

Old age pension and intergenerational living arrangements: a regression discontinuity design

China launched a pension program for rural residents in 2009, now covering more than 300 million Chinese. This program offers a unique setting for studying the ageing population, given the rapidity of China’s population ageing, traditions of filial piety and co-residence, decreasing number of children, and dearth of formal social security, at a relatively low income level. This paper examines whether receipt of the old-age pension payment equips elderly parents and their adult children to live apart and whether parents substitute children’s time involved in instrumental support to them with service consumption. Employing a regression discontinuity design to a primary longitudinal survey conducted in Guizhou province of China, this paper overcomes challenges in the literature that households eligible for pension payment might be systematically different from ineligible households and that it is difficult to separate the effect of pension from that of age or cohort heterogeneity. Around the pension eligibility age cut-off, results reveal large and significant reduction in intergenerational co-residence of the extended family and increase in service consumption among elderly parents.     

RISING TOP INCOMES AND INCREASED BORROWING IN THE REST OF THE DISTRIBUTION

One potential consequence of rising top‐income concentration is borrowing by less‐affluent households attempting to maintain relative living standards. This paper evaluates the “keeping up with the Joneses” phenomenon, examining the responsiveness of payment‐to‐income ratios for different debt types across the income distribution to changes in income among affluent households. The analysis provides evidence for the responsiveness of debt to rising top incomes. Middle‐ and upper‐middle‐income households take on more housing‐related debt and have higher payments in places with higher top‐income levels. Among lower‐income households non‐mortgage borrowing and debt payments decline, consistent with restrictions in the supply of credit. (JEL D63, D14)     

Family labor supply,taxation and saving in an imperfect capital market

This paper combines income and expenditure with time use data to provide a unique picture of the labor supply, household production, saving and consumption decisions of two-adult households over a life cycle defined in terms of the presence and ages of children. The study also draws on data for household borrowing and lending, direct and indirect benefits and taxes to calibrate a “family” life cycle model at the core of which is the hypothesis that households face a borrowing interest rate that rises with the amount of non-collateral based borrowing. The household members jointly choose time paths of time use, consumption and saving over their life cycle in the face of this capital market imperfection. Importantly, households are shown to differ significantly in their saving behavior in a way that depends on secondary earner labor supply, with a strong positive association between saving and the income of the second earner. The results differ sharply from those of the existing literature.     

The Burden of Medical Debt Faced by Households with Dependent Children in the United States: Implications for the Affordable Care Act of 2010

This paper examines the relationship between the number of dependent children and medical debt outcomes. Results show that the presence of dependent children in the household increased the probability of having any medical debt by 8 % for “high” financial burden households, 4 % for households at the 50th percentile of the income distribution and 3 % for privately insured households. The amount of medical debt by households at the 75th percentile of the income distribution was also increased. These findings show that the number of dependent children in the household was associated with medical debt for households in the middle of the income distribution. These results may be explained by the fact that those households at the lower tail of the income distribution are more likely to have public coverage, which tends to have lower cost sharing compared to those with private insurance.     

THE EFFECT OF NONCONTRIBUTORY PENSIONS ON SAVING IN MEXICO

This paper examines the effects of noncontributory pension programs at the federal and state levels on Mexican households' saving patterns using micro data from the Mexican Income and Expenditure Survey. We find that the federal program curtails saving among households whose oldest member is either 18–54 or 65–69 years old, possibly through anticipation effects, a decrease in the longevity risk faced by households, and a redistribution of income between households of different generations. Specifically, these households appear to be reallocating income away from saving into human capital investments, like education and health. Generally, state programs have neither significant effects on household saving, nor does the combination of federal and state programs. Finally, with a few exceptions, noncontributory pensions have no significant impact on the saving of households with members 70 years of age or older—individuals eligible for those pensions, plausibly because of their dissaving stage in the lifecycle. (JEL D14, J26, O12, H55)     

The factors affecting a family's plan to change its financial situation

This study investigates the factors involved in changing a family's financial situation for 485 Midwestern households. High income families and those with high home equity levels have a smaller gap between their standards and levels of consumption. High income families are more satisfied with their financial situations than low income families. Those families with a large gap between their standards and levels of consumption are more dissatisfied with their financial situations. Older heads of households have higher satisfaction with their financial situations and are less likely to plan to change them. Large families are less satisfied with their financial situations than small families and are more likely to plan to change them.Sharon M. Danes is Assistant Professor and Family Resource Management Extension Specialist, Family Social Science Department, University of Minnesota, 275F McNeal Hall, 1985 Buford Avenue, St. Paul, MN 55108. Dr. Danes received her Ph.D. from Iowa State University and her current research interests include family management and family financial management.Earl W. Morris is Associate Professor, Department of Design, Housing, and Apparel, University of Minnesota, 368B McNeal Hall, 1985 Buford Avenue, St. Paul, MN 55108. Dr. Morris received his Ph.D. from Cornell University. His current research interests include rural housing.     

The growing importance of diversification activities for French farm households

Diversification activities, on-farm or off-farm, can allow farmers not to rely exclusively on farming for the household's income. In many rural areas, onfarm tourism and off-farm employment have become an important and steady source of income for farm households. The most significant change over the last 10 years has been the substantial growth in off-farm labour participation by farm spouses. This paper, based on the neoclassical farm-household, is an attempt to characterize the variables that affect the decisions to work off-farm for the French farm households and the decision whether or not to hire labour on-farm. Furthermore the impact of the Common Agricultural Policy (CAP) on the participation in the off-labour market is studied. In a simplified model where male and female labour are perfect substitutes we can show that the reduction in the cereals price and the set-aside would induce a decrease in the reservation wage and hence an increase in the probability of off-farm participation. On the other hand the receipt of compensatory payment would have a negative impact on the probability of off-farm work participation. Empirical results show that while the CAP reform will increase wives' off-farm participation, education and age have a greater positive effect. Furthermore, simulations show that the impact of the CAP reform on off-farm labour market participation is higher for wives who do not have a high school diploma than for those who do.     

Der Wandel der Konsumstruktur in Deutschland – ein Indiz für die Individualisierung von Lebensstilen oder doch die Folge soziodemografischer Entwicklungen?The change of consumption patterns in Germany – an evidence of the individualization of lifestyles or the effect of socio-demographic changes?

Following the results of different empirical studies the consumption patterns of German households changed significantly during the last decades. While this change was attributed to a dissolving correlation between lifestyle and social status for a long time, more and more studies focus on the relationship of lifestyle and socio-demographic criteria again. This report analyses the effects of social composition regarding age, income and households types on the use of income between 1978 and 2008. The results of the decomposition analysis reveal that the socio-demographic components cannot explain the change of consumption patterns in Germany. Rather it seems that different social conditions during socialisation affect lifestyles and should be considered when analysing consumption patterns.     

The Use of Remittance Income in Mexico

Immigration affects sending countries through the receipt of remittance income. The impact of these cash transfers on households and communities has brought attention to remittances as a development mechanism. This study attempts to understand the degree to which household consumption is affected by the receipt of remittance income and the ways in which the broader communities may be impacted. Using household income and expenditure data for Mexico, expenditure patterns of remittance‐receiving households are analyzed. Regression analysis indicates that remittance‐receiving households spend a greater share of total income on durable goods, healthcare, and housing.     

Food Calorie Intake under Grain Price Uncertainty in Rural Nepal

This study evaluated the effects of grain output price uncertainty on the farm income of rural households and, consequently, how this uncertainty influenced caloric intake through changes in farm income. Using a national rural household survey data set in Nepal, augmented with output price uncertainty measures calculated from historical time-series data, we found that grain output price uncertainty (especially for rice and wheat) tends to decrease crop production income of rural households. In addition, we found that lower crop income from production decreases calorie intake of rural households. Taken together, these results suggest that output price uncertainty during the production process tends to reduce caloric intake of rural Nepalese households. The price uncertainty seemed to reduce the crop income households need to buy calorie-rich staple foods.     

The welfare impact of microcredit on rural households in China

Microcredit has gained worldwide acceptance in recent years as a flexible mechanism to expand individuals’ (especially the poor's) access to financial services, which is considered as an efficient way to achieve poverty reduction and other social development. A large number of empirical studies have been done to examine the welfare effects of microcredit on the borrowers and such effects are well documented in many other countries such as Bangladesh. However, the impacts of microcredit on China rural households’ livelihood are not well documented. This paper attempts to empirically evaluate the impact of microcredit on household welfare outcomes such as income and consumption in rural China. The estimation is based on the difference-in-difference approach which is an increasingly popular method of tackling the selection bias issue in assessing the impacts of microcredit. The study uses a two-year panel dataset, including both primary and secondary data collected through a household survey in rural China. Our empirical results favour the wide belief in the literature that joining microcredit programme helps improve households’ welfare such as income and consumption. Despite the optimistic findings on how microcredit has changed the rural households’ living conditions, our results show that the vast majority of the programme participants are non-poor, which casts some doubts on the social potential (such as poverty reduction) of China's microcredit programmes.     

The political viability of a negative income tax

This paper offers three propositions relating to the political viability of the negative income tax. One, despite its work disincentive, a majority of households would support a linear income tax that makes cash payments to low income households. However two, when government consumption is sufficiently high, a majority would favor a proportional tax over such a tax. Three, under certain conditions, a majority of households will prefer public provision of a private good or an in-kind transfer to a negative income tax. These latter two propositions offer an explanation for the public's apparent distaste for widespread cash transfers. Received: 17 September 1999/Accepted: 21 April 2000     

Parental financial support and filial responsibility in emerging adulthood: a comparative study between the United States and South Korea

Why do parents provide considerable financial support to their children in college? How do college students feel about their parental financial support and how does it differ between American and Korean cultural contexts? Based on multiple group analysis, we tested the impact of family income and parents’ education on parental tuition and living expenses supports, which in turn affects college students’ perception of filial responsibility across the United States and South Korea. Participants included 179 American college (AC) students from Syracuse University and 268 Korean college (KC) students from Yonsei University Wonju. We found that family income was significantly related to an increase in parental tuition and living expenses supports for both AC and KC students. However, parents’ education was significantly related to an increase in parental tuition and living expenses supports for AC students, but not for KC students. In addition, parental tuition support was related to an increase for filial responsibility, and parental living expenses were related to a decrease in filial responsibility in KC students, but not for AC students. These results indicate that the association between parental financial support and college students’ perception of filial responsibility differs across American and Korean cultural contexts.     

The impact of privatization and change of social security systems upon living conditions of east German households

After the collapse of the communist regime East Germany became the prime example of a ‘Big Bang’ strategy of transformation. Rapid marketization and privatization brought about a disastrous economic downturn. But immense transfer payments from West Germany and the import of a well‐developed system of social security institutions accompanied the transformation, minimizing social costs. This article summarizes the main developments and analyzes their impact on the living conditions of East German households. The indicators presented cover labour force participation, business activities and economic inactivity in the household context; relative income position, poverty, income inequality and the self‐assessment of income changes; consumption and livelihood. The article reveals both the different experiences of gains and losses within East German society and the (in some respects) advantageous position of East German households compared with households in Hungary, Poland, and the Czech and Slovak Republics.     

Effect of consumption choices on fluxes of carbon,nitrogen and phosphorus through households

Households are an important scale of analysis for human ecosystems because they are a major source of pollutants and could thus be a new focus for pollution management, particularly for education-based source reduction strategies. The household is also a meaningful unit for analysis of human ecosystems, being common to all human cultures. This study develops a Household Flux Calculator (HFC) to compute C, N, and P fluxes for scenarios intended to represent three levels of household consumption: low, typical, and high. All three scenarios were developed for suburban households with two adults and two children in the Minneapolis-St. Paul (Twin Cities) metropolitan area, Minnesota. Calculated ratios of fluxes between high and low consumption households were 3.5:1 for C, 2.7:1 for N and 1.4:1 for P. Results suggest a high level of discretionary consumption that could be reduced without a substantial reduction in standard of living. Thus, modest changes in behavior in high consumption households would greatly reduce fluxes of C, N, and P without major changes in lifestyle.

For Richer or for Poorer? Evidence from Indonesia, South Africa, Spain, and Venezuela

We analyze household income dynamics using longitudinal data from Indonesia, South Africa (KwaZulu-Natal), Spain and Venezuela. In all four countries, households with the lowest reported base-year income experienced the largest absolute income gains. This result is robust to reasonable amounts of measurement error in two of the countries. In three of the four countries, households with the lowest predicted base-year income experienced gains at least as large as their wealthier counterparts. Thus, with one exception, the empirical importance of cumulative advantage, poverty traps, and skill-biased technical change was no greater than structural or macroeconomic changes that favored initially poor households in these four countries.     

Pluriactivity in the Moshav:: family farming in Israel

In the past several years, pluriactivity has become quite widespread among moshav farming households, especially those located within Metropolitan Tel Aviv's rural fringe. Agricultural income has been on the decline and other sources of income have appeared. This paper has a threefold aim: To identify major patterns of income sources among Moshav's households; to explain the underlying causes for choosing pluriactivity as an income-producing strategy; and to explain the reasons for the specific choice of pluriactivity patterns adopted.An analysis of the activities of moshavim¹ located in the Sharon Region indicates that the further the moshav from the metropolitan area, the greater the role of agriculture in total family income. Within a pluriactivity strategy, the main additional sources of income are wage employment and small business activity, carried out either on or off the moshav. The main factors stimulating the increase in pluriactivity are the decline in agricultural income and the desire to take advantage of vocational training. This trend is supported by other factors, such as the availability of premises for alternative uses as well as the ease of operating a business from the home.The divergence in pluriactivity patterns may indicate that the frequency of mixing agriculture with other income sources may be a temporary option adopted by households for which agriculture has been a mainstay. Those households may shift away from agriculture in the short or mid-term. We would argue that at present, for the majority of those no longer devoted solely to agriculture, pluriactivity is also aimed at helping to sustain agricultural activity. In such cases, farmers utilise the resources acquired from non-agricultural employment for investment in agriculture, including the upgrading of equipment and other assets.