Risk, Implicit Contracts and the Family in rural

In this paper the role of family structure in mitigating income volati-lity in the absence of income insurance in low-income agricultural environments is discussed. Hypotheses concerning the relationship between the membership, size and composition of households and insurance-based income transfers are tested using longitudinal data from India. A test is also performed of whether a household's ability to reduce risk ex post via family arrangements affects its willingness tobear risk ex ante through its selection of formal tenancy contracts. The results support these hypotheses concerning the risk-mitigating roles of both household structure and share contracts, and indicate as well the importance of heterogeneity in risk-aversion across households. In recent years our understanding of rural institutions in low-income set-tings has been increased substantially by the application of modern micro-analytic models and methods to such environments. Two strands of literature have emerged. One has focused on the econometric modeling of household "insti