Self-insurance and consumption risk-sharing between birth-year cohorts in Turkey

This paper tests the empirical validity of the consumption risk-sharing hypothesis across urban and rural regions in Turkey. For this purpose, I analyze fourteen consecutive waves of the TURKSTAT Household Budget Surveys from 2003 to 2016 and prepare a pseudo-panel data set for birth-year cohorts. The empirical analysis shows that there is imperfect consumption risk-sharing between birth-year cohorts in Turkey. We observe that the growth of cohort consumption is positively and significantly associated with both the growth of cohort income and the growth of aggregate consumption. Finally, we find that cohorts would have sacrificed modest amounts to insure their consumption.