Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/64516 
Year of Publication: 
2008
Series/Report no.: 
Working Paper No. 639
Publisher: 
University of California, Economics Department, Santa Cruz, CA
Abstract: 
This paper presents results from a randomized field experiment to test for the importance of limited commitment (due to incomplete contract enforceability) in explaining intra-household risk sharing arrangements in Kenya. The experiment followed 142 daily income earners and their spouses for 8 weeks. Every week, each individual had a 50% chance of receiving a 150 Kenyan shilling (US $2) income shock (equivalent to about 1.5 days income for men and 1 week's income for women). This paper has 2 main results. First, since the experimental payments are random, they allow for a direct test of allocative Pareto efficiency. I reject efficiency, as male private goods expenditures are sensitive to the receipt of the payment. Second, the experiment varied the level of intra-household correlation in the experimental payments between couples. I find that women send bigger transfers to their husbands when shocks are independent or negatively correlated, a result consistent with the presence of limited commitment. I find no difference in transfers for men, likely because the shocks were too small to cause the limited commitment constraint to bind for them.
JEL: 
C93
D13
D61
O12
Document Type: 
Working Paper

Files in This Item:
File
Size
231.44 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.