Localized reciprocity, self-insurance, and agricultural productivity in south Asia

This dissertation consists of three theoretical essays on informal insurance, self-insurance, and agricultural productivity. In the first essay, we identify conditions under which risk-sharing institutions are likely to arise and under which full income pooling will be achieved. We argue that less than full insurance at the community-level arises due to two types of transaction costs: "association" costs of establishing links and "extraction" costs of maintaining good links with partners. Depending on the combination of costs, insurance spans a spectrum from full community-wide insurance, to partial insurance in sub-coalitions, to situations when insurance arrangements are infeasible. Empirical results using household data from Pakistan suggest that reciprocity is localized to kin and to other partners with lower transaction costs of executing trades.;How do households adjust the level and composition of savings in response to shocks to income or consumption? In the second essay, we show that savings in every period respond to current and anticipated shocks. Whenever possible, households use savings and dissavings in liquid assets subject to constant returns rather than in assets which are either less liquid or are subject to diminishing returns. Empirical results using data from rural Pakistan verify this proposition; households, particularly the rich, use financial instruments, which are liquid and accrue returns at a constant rate, to smooth consumption. Production assets such as livestock and equipment are used, but to a lesser degree. The poor who are both resource poor and credit constrained are unable to smooth consumption effectively.;In the final essay, we analyze assumptions underlying the growth accounting decomposition of output growth into total factor productivity (TFP) and input growth. This analysis is used to critique the use of the TFP approach to estimate the sustainability of economic systems. We provide districtwise estimates of productivity growth in Northwest India. Estimates suggest that productivity growth was surprisingly low during the Green Revolution years and increased in later years. We propose that productivity growth did not come from the adoption of modern varieties alone. Rather, indirect benefits of improved resource management, along with public investment in infrastructure, were responsible for improving productivity.