'Dragon Boating' Alone? Community Ties and Systemic Income Shocks

37 Pages Posted: 19 Dec 2018

See all articles by Konstantinos Matakos

Konstantinos Matakos

King’s College London - Department of Political Economy; Harvard University - Department of Government

Dimitrios Minos

King's College London, DPE

Ari Perdana

Asian Development Bank

Elizabeth Radin

Columbia University - Mailman School of Public Health

Date Written: November 29, 2018

Abstract

Can social capital effectively cushion households against adverse income shocks, especially in the absence of formal insurance mechanisms in developing countries? We analyze whether participation in formal and informal community activities (our measure of social capital) helped households in Indonesia mitigating the impact of the 1998 economic crisis. We use the 1997 and 2000 rounds of the Indonesian Family Life Survey (IFLS) to capture the impact of the crisis on household welfare and assess the potency of social capital as a safety net. In contrast to previous studies, our empirical results do not lend support to this hypothesis. Using an IV strategy, we find community participation not to be statistically significant in explaining changes in household expenditure. The large magnitude and universal nature of the shock might explain why social capital did not help households. However, we find some evidence that households who participated in such activities are more likely to have received financial assistance from local authorities without necessarily being the neediest ones.

Keywords: Social Capital, Household Welfare, Economic Crisis, Participatory Development, Indonesia

JEL Classification: O10, C26, L14, D10

Suggested Citation

Matakos, Konstantinos and Minos, Dimitrios and Perdana, Ari and Radin, Elizabeth, 'Dragon Boating' Alone? Community Ties and Systemic Income Shocks (November 29, 2018). Available at SSRN: https://ssrn.com/abstract=3292917 or http://dx.doi.org/10.2139/ssrn.3292917

Konstantinos Matakos

King’s College London - Department of Political Economy ( email )

Bush House NE
London, London WC2B 4BG
United Kingdom

HOME PAGE: http://https://sites.google.com/site/kostasmatakos/

Harvard University - Department of Government ( email )

1737 Cambridge Street
Cambridge, MA 02138
United States

Dimitrios Minos (Contact Author)

King's College London, DPE ( email )

United Kingdom

Ari Perdana

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Elizabeth Radin

Columbia University - Mailman School of Public Health ( email )

600 West 168th St., 6th Floor
New York, NY 10032
United States

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