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The evolution of consumption inequality and risk-insurance in Chile

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  • Madeira, Carlos

Abstract

Using micro survey data, I show that income and consumption inequality fell substantially in Chile since 1987. Consumption inequality between and within groups fell substantially over the last 35 years, especially for within groups. During this period, households' use of financial services increased substantially. Estimating a standard consumption model, the results reject both the autarky and the full risk sharing frameworks. It is found that for services and non-durable goods, consumption is almost half-way between autarky and full risk-sharing. However, purchases of Semi-Durables, Durables, Medical, Insurance, and other financial products are strongly affected by income fluctuations.

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  • Madeira, Carlos, 2023. "The evolution of consumption inequality and risk-insurance in Chile," Emerging Markets Review, Elsevier, vol. 54(C).
    • Handle: RePEc:eee:ememar:v:54:y:2023:i:c:s1566014123000018
    DOI: 10.1016/j.ememar.2023.100996
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    Cited by:

    1. Carlos Madeira, 2024. "Indebtedness and labor risk sorting across consumer lender types: evidence from Chile," Working Papers Central Bank of Chile 1004, Central Bank of Chile.
    2. Albagli, Elías & Chovar, Alejandra & Luttini, Emiliano & Madeira, Carlos & Naudon, Alberto & Tapia, Matias, 2023. "Labor market flows: Evidence for Chile using microdata from administrative tax records," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 4(4).

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    More about this item

    Keywords

    Credit; Inequality; Risk sharing;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H00 - Public Economics - - General - - - General

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