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Publications [#323829] of Xiao Yu Wang

Journal Articles

  1. Wang, XY, Policy-making and the adaptability of informal institutions, The World Bank Economic Review, vol. 29 no. suppl 1 (January, 2015), pp. S174-S181, Oxford University Press (OUP) [doi]
    (last updated on 2021/10/16)

    Abstract:
    This article discusses several of the insights generated by a theory of the formation of relationships between heterogeneously risk-averse individuals who lack access to formal insurance. An example illustrates the policy relevance of the theory, and demonstrates a relationship between the emergence of entrepreneurship in developing economies and higher income inequality. Reducing aggregate risk is a strict Pareto improvement if relationships in the status quo are assumed to remain constant, but is shown to be particularly harmful for the most risk-averse individuals and to exacerbate inequality when the endogenous network response is taken into account: the least risk-averse individuals abandon their roles as informal insurers in favor of entrepreneurial partnerships.


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