TY  - JOUR
AU  - Chetty, Raj
AU  - Looney, Adam
TI  - Income Risk and the Benefits of Social Insurance: Evidence from Indonesia and the United States
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11708
PY  - 2005
Y2  - October 2005
DO  - 10.3386/w11708
UR  - http://www.nber.org/papers/w11708
L1  - http://www.nber.org/papers/w11708.pdf
N1  - Author contact info:
Raj Chetty
Department of Economics
Harvard University
Littauer 321
Cambridge, MA 02138
Tel: 617/744-9492
E-Mail: chetty@fas.harvard.edu

Adam Looney
The Brookings Institution
1775 Massachusetts Ave NW
Washington, DC 20036
E-Mail: alooney@brookings.edu
M1  - published as Raj Chetty, Adam Looney. "Income Risk and the Benefits of Social Insurance: Evidence from Indonesia and the United States," in Takatoshi Ito and Andrew K. Rose, editors, "Fiscal Policy and Management in East Asia" University of Chicago Press (2007)

AB  - This paper examines the welfare consequences of social safety nets in developing economies relative to developed economies. Using panel surveys of households in Indonesia and the United States, we find that food consumption falls by approximately ten percent when individuals become unemployed in both countries. This finding suggests that introducing a formal social insurance program would have small benefits in terms of reducing consumption fluctuations in Indonesia. However, in contrast with households in the U.S., Indonesians use costly methods such as reducing human capital investment to smooth consumption. The primary benefit of social insurance in developing countries may therefore come not from consumption smoothing itself but from reducing the use of inefficient
smoothing methods.
ER  -