The recent financial crisis in Asia, coupled with the drought in Southeast Asia brought on by the El Niño weather pattern, have focused international attention on the impact of income shocks on households in developing countries. The welfare cost of highly variable income depends on the ability of households to smooth consumption by saving in good years and dissaving in bad years. If households are unable to smooth consumption and thus are forced to reduce consumption levels when faced with a negative transitory income shock, there may be a role for government assistance. By examining the impact of transitory income on educational expenditure, we investigate in this article whether households are able to smooth consumption. We have chosen to focus on educational expenditure because of its obvious social benefits.
Economic Development and Cultural Change
Department of Economics

Cameron, L.A. (L. A.), & Worswick, C. (2001). Education expenditure responses to crop loss in Indonesia: A gender bias. Economic Development and Cultural Change, 49(2), 351–363. doi:10.1086/452506