INCOME INSTABILITY AND CONSUMPTION - SAVINGS IN SOUTH KOREAN FARM HOUSEHOLDS, 1965-1970

An index of income instability and various consumption functions, based on a permanent income model, were utilized to estimate the effects of income on savings-consumption behavior. Conclusions were that: unstable farm income resulted in increased savings; most farm credit is associated with consumption; policy-makers ought to be particularly aggressive in designing savings mobilization programs which focus on regions and households experiencing income instability due to rapid increases in off-farm employment, highly variable weather, and/or rapid technological change; and low absolute income levels do not supress savings behavior. Report contains formulas, models, tables, and a bibliography.