Chapter

Inequality and Risk

Marcel Fafchamps

in Insurance Against Poverty

Published in print November 2004 | ISBN: 9780199276837
Published online January 2005 | e-ISBN: 9780191601620 | DOI: http://dx.doi.org/10.1093/0199276838.003.0005

Series: WIDER Studies in Development Economics

Inequality and Risk

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The impact of risk, wealth accumulation and insurance on inequality are investigated. Trade-offs exist between insurance and mobility, and asset markets and social polarization. In the presence of imperfect commitment, mutual insurance may be easier to sustain in the form of patronage in unequal societies. When wealth is made up of assets in fixed supply, trade in these assets leads to an unequal distribution of welfare and income.

Keywords: risk; wealth; insurance; inequality; imperfect commitment; patronage

Chapter.  14615 words.  Illustrated.

Subjects: Economic Development and Growth

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