Economic shocks, wealth, and welfare

Type Journal Article - Journal of Human Resources
Title Economic shocks, wealth, and welfare
Volume 38
Issue 2
Publication (Day/Month/Year) 2003
Page numbers 280-321
The immediate effects of the Asian crisis on the well-being of Indonesians are examined using the Indonesia Family Life Survey, an ongoing longitudinal household survey. There is tremendous diversity in the effect of the shock: for some households, it was devastating; for others it brought new opportunities. A wide array of mechanisms was adopted in response to the crisis. Households combined to more fully exploit benefits of scale economies in consumption. Labor supply increased even as real wages collapsed. Households reduced spending on semidurables while maintaining expenditures on foods. Rural households used wealth, particularly gold, to smooth consumption.

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