Kseniya Abanokova1, Michael Lokshin1
  • 1 National Research University Higher School of Economics, 20 Myasnitskaya Str., Moscow, 101000, Russian Federation

Growing Size of a Household as a Mechanism of Adaptation to Crises

2014. Vol. 18. No. 1. P. 80–101 [issue contents]
There are many mechanisms households employ to adapt to shocks. A coping strategy that receives little attention in the literature is the adaptation of household size and structure in response to changing economic conditions. Using data from Russian Longitudinal Survey that span the two recent economic recessions of 1998 and 2008, we provide new empirical evidence on how households may respond to economic shocks, focusing on the role of changes in household size and composition. We assume that individuals face a tradeoff between taking advantages of economies of scale and specialization when living with others and individual privacy. Consumption smoothing is achieved by forgoing privacy during the crisis and results in increases in household size. We control for the endogeneity of household consumption with respect to household structure by using the instrumental variable method. Our empirical results suggest that members of the households that experienced negative income shocks are more likely to move in with others than households whose income remained the same or increased. Policy measures may include the simplification of procedures related to the geograp­hical transfers of health insurance and pensions, the development of programs of part-time and temporary employment to help households to implement their own coping strategies.

Citation: Abanokova Kseniya Ruslanovna, Lokshin Michael Moiseevich (2014) Ukrupnenie razmera kak mekhanizm adaptatsii domokhozyaystv k krizisu [Growing Size of a Household as a Mechanism of Adaptation to Crises]. HSE Economic Journal, 1, pp. 80-101 (in Russian)
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