Chinese Farmers' Income Risk Coping Mechanisms And The Relationship Of Consumption Volatility

The peasant household of china faces multiple income risks, the income risks cause multiple negative effect. In practice, they make use of many formal and informal mechanisms including risk-sharing in social net, intertemporal consumption smoothing, land system, modern social security, and commercial insurance to cope with income risks. The present overseas literatures have researched informal coping-with-risk mechanisms fully and the present inland literatures have researched formal coping-with-risk mechanisms fully. At the base of the literatures, it tries to build a theory model according Optimal model with constraint, which illustrates the logic relation of the coping-with-income-risk mechanisms and consumption fluctuation.According the model, after exploring the Chinese peasant household's coping-with-risk mechanisms in history, it analyses the present situation of the coping-with-income-risk mechanisms of the peasant household in the economy transition , and puts forward some hypothesis about the relation of the coping-with-income-risk mechanisms and consumption fluctuation. It tests the hypothesis through analyzing the questionnaire data from 1151 peasant households in shannxi with the method of logistic regression. The result indicates: (1) the risk-sharing pooling in social net mechanism is still important for the peasant household to reduce consumption fluctuation. (2) the intertemporal consumption smoothing mechanism has become important, but is still limited by some factors; reviewing from inside of the intertemporal consumption smoothing mechanism, the saving is most important, but the effect of borrowing from the informal credit market is limited, the effect of formal credit market is not found. (3) at the aspect of formal mechanism, land is still important; the government relief is important of helping the peasant household maintain the basic lives level; the commercial insurance has no effect.At last, it advises to build a system including formal and informal mechanisms to help peasant household cope with income risks. It thinks that we should improve social net and reform financial market to help the peasant household cope with income risk at the time of strengthen the formal mechanism.The main innovations of this article are as follows. Firstly, using the international development economics abroad for reference, it explores the informal coping-with-income-risk mechanisms of peasant household, indicates the important effect of the informal mechanisms including risk pooling in social net and intertemporal consumption smoothing. Secondly, it builds a theory model to indicate the behavior how the peasant household tries minimize consumption fluctuation limited by resource, and to judge the relation of the limited factors of sorts of coping-with-income-risk mechanisms and consumption fluctuation. Thirdly, with special questionnaire data, it tests experientially the relation of coping-with-income-risk mechanisms and consumption fluctuation directly in order to show clearly the effect of kinds of coping-with-income-risk mechanisms. Finally, it puts forward a all-round coping-with-income-risk system including formal and informal mechanisms.