Journal Article Borrowing Constraints and Portfolio Choice Get access Christina Paxson Christina Paxson Princeton University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 105, Issue 2, May 1990, Pages 535–543, https://doi.org/10.2307/2937799 Published: 01 May 1990

This paper measures the extent to which farmers are able to use savings and dissavings to smooth consumption in response to unexpected shocks to income. Time-series information on regional rainfall is used to construct estimates of transitory income due to rainfall shocks. The relationship between these measures of transitory income and savings indicates that farm households save a significantly higher fraction of transitory income than nontransitory income.

Many households in developing countries rely on seasonal agriculture for their incomes. This paper investigates whether household consumption expenditure tracks income across seasons. Using data from Thailand, I contrast the seasonal consumption patterns of households with different seasonal income patterns and estimate the responsiveness of seasonal consumption to seasonal income. I find little evidence that consumption tracks income over the course of the year. The findings suggest that observed seasonal consumption patterns are the result of seasonal variations in preferences or prices, common to all households, rather than an inability of households to use savings behavior to smooth consumption.

Many households in developing countries rely on seasonal agriculture for their incomes. This paper investigates whether household consumption expenditure tracks income across seasons. Using data from Thailand, I contrast the seasonal consumption patterns of households with different seasonal income patterns and estimate the responsiveness of seasonal consumption to seasonal income. I find little evidence that consumption tracks income over the course of the year. The findings suggest that observed seasonal consumption patterns are the result of seasonal variations in preferences or prices, common to all households, rather than an inability of households to use savings behavior to smooth consumption.

The permanent income hypothesis implies that, for any cohort of people born at the same time, inequality in both consumption and income should grow with age. We investigate this prediction using cohort data constructed from 11 years of household survey data from the United States, 22 years from Great Britain, and 14 years from Taiwan. The data show that within-cohort consumption and income inequality measures do indeed increase with age in the three economies and that the rate of increase is similar in all three. According to the permanent income hypothesis, the increase in inequality reflects cumulative differences in the effects of luck on consumption. Other models of intertemporal choice--such as those with strong precautionary motives or liquidity constraints--can limit or even prevent the spread of inequality, as can insurance arrangements that share risk across individuals. The evidence on the spread of inequality can therefore be used to help quantify the extent to which private and social arrangements moderate the impact of risk on the distribution of individual welfare.

Hurricane Katrina displaced approximately 650,000 people and destroyed or severely damaged 217,000 homes along the Gulf Coast. Damage was especially severe in New Orleans, and the return of displaced residents to this city has been slow. The fraction of households receiving mail (which, in the absence of reliable population estimates, is a good indicator for returns) was 49.5 percent in August 2006, and 66.0 percent in June 2007 (Greater New Orleans Community Data Center, 2007). Low-income minority families appear to have been slower than others to return (William H. Frey and Audrey Singer, 2006). In this paper, we examine the determinants of returning to New Orleans in the 18 months after the hurricane. The data come from a study of low-income parents, mainly African American women, who were enrolled in a community college intervention prior to the hurricane. Although the sample is not representative of the pre-Katrina population of the city, it nonetheless is of great interest. The relatively slow return of low income, primarily African American, residents is a politically charged issue. One (extreme) view is that the redevelopment plans are designed to discourage low-income minority residents from returning. A quite different view is that members of this group have found better opportunities outside of New Orleans, and do not want to return. Because few data sets trace individuals from before to after the hurricane, this debate has taken place largely without the benefit of evidence.

We examine how child maltreatment—including neglect, physical and sexual abuse, and other forms of maltreatment—is affected by parental economic circumstances. Using state‐level panel data on cases of maltreatment and numbers of children in foster care, we find that increases in the fractions of children with absent fathers and working mothers in a state are related to increases in many measures of maltreatment, as are increases in the share of families with two nonworking parents and those with incomes below 75% of the poverty line. Decreases in state welfare benefit levels are associated with increases in foster care placement.

This article concerns dual job holding and its link to job mobility. We present evidence from U.S. data on patterns of dual job holding, hours changes, and job mobility. We find that workers move into and out of second jobs frequently, that these movements are associated with large changes in work hours, and that hours constraints may prompt workers to take second jobs. Second, we review theories of dual job holding and present a stochastic dynamic model of dual job holding and job mobility in which decisions to take second jobs and/or change main jobs are made simultaneously.