IDEAS home Printed from https://ideas.repec.org/a/ids/ijsuse/v11y2019i3p286-302.html
   My bibliography  Save this article

The effects of temporary income shocks on household expenditure: the case of Ecuador

Author

Listed:
  • Milenko Fadic

Abstract

I study how household expenditures on non-durable consumption and human capital change in response to a positive and temporary income shock. I examine a sample of single-income earning Ecuadorian households where the income earner participated in a procurement process that uses a random lottery to select winning bidders for public tenders. I use a unique dataset that combines the results from the lottery with confidential tax-level data. I find that income shocks cause households to increase spending in education and health by 8% and in food and clothing by 11% during the year of the shock. I also find that households that received shocks of higher magnitudes smooth their expenditures over time. In addition to providing a measure of the propensity to consume for households in Ecuador, this study contributes to the literature by focusing on an unexpected, positive and temporary income shock. Additionally, this study estimates the joint effects on non-durable consumption and human capital, areas which have traditionally been studied separately.

Suggested Citation

  • Milenko Fadic, 2019. "The effects of temporary income shocks on household expenditure: the case of Ecuador," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 11(3), pages 286-302.
    • Handle: RePEc:ids:ijsuse:v:11:y:2019:i:3:p:286-302
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=100681
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijsuse:v:11:y:2019:i:3:p:286-302. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=301 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.