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<small>(Chapter 3)</small><p>
<b><font size=+1> The role of net liquid wealth as household coping strategy</font></b>
<p>
<I><a href="apx4_5.html">See table 3.42 to 3.53 in the appendix 4 for references to this section.</a></I>
<p>
In this section we will discuss changes in net liquid wealth among households
in the sample. Reduction in net liquid wealth whether through use of savings,
or through taking up debt or credits allows households to break the immediate
link between household income and consumption expenditures. Drawing on net
liquid wealth may thus be yet another adaptation strategy vis-à-vis
the drop in income from formal employment after the border closure.
<p>
Even during economic crises households <i>must</i> uphold a certain minimum level
of consumption expenditures. Use of savings, or taking up debt or credits,
may provide a household with some leeway before adapting compensatory measures
on the income side of the household economy. That households may choose
to reduce their net liquid wealth rather than compell their members to engage
in <i>any</i> kind of income-generating activity, could explain what seems to be
the low downward shift in worker reservation wages.
<p>
As already mentioned, reduction of net liquid household wealth can only
be a short-term strategy. In the longer term, households without public
social security must either reduce their consumption expenditures, or implement
<i>all</i> possible compensatory measure on the income side to meet their minimum
consumption requirements.
<p>
Drawing on net liquid wealth as a household coping strategy is consequently
closely linked to expectations about future income possibilities. The more
optimistic the expectations about future developments, the more will utilization
of net liquid wealth appear as an attractive temporary solution, compared
to a more painful reduction in household consumption expenditures.
<p>
Reducing net liquid wealth is, however, not a strategy available to all
households. Some households possess no savings, and have restricted access
to loans and credits. Households that use their savings may thus be less
deprived than households which have nothing to sell.
<p>
The previous section found no reason to reject the "family employment
<i>network</i>" hypothesis, according to which individuals facing employment problems
rely primarily on the labour activity of other household members for economic
support. Another possible coping strategy within the household support system
may be labelled the "<i>family capital network</i>" hypothesis, whereby individuals
facing employment problems also rely on reduction in net liquid household
wealth for survival.
<p>
Before looking into this hypothesis, we need to present the indicators for
net liquid wealth to be used. Second, we will discuss their distribution
across socio-economic groups, and third, consider how they should be interpreted.
<p>
<b><a name="indicators">Indicators for net liquid household wealth</a></b>
<p>
In addition to the index for household possession of consumer durables presented
in the previous section, the survey has used four indicators to measure
the level of net liquid household wealth, and any changes in it.
<p>
The two first indicators are possession and sale of <i>gold</i> (jewellery) and
use of other "<i>savings</i>". Gold and "savings" are used as labels for
real or finance capital of high liquidity, i.e assets which can be quickly
transformed into legal tender without losing substantial value. Most real
capital assets included in the index for household possession of consumer
durable described above have low liquidity, and are consequently not considered
as "savings".
<p>
Many Palestinian households, in particular those who became refugees, lost
all or most of their gold and other such savings in the 1948-49 war. Because
savings are frequently obtained through inheritance, we would expect the
number of households with savings to be generally low, since there are many
refugee households in our sample.
<p>
Gold has been singled out as a separate asset, for two main reasons. First,
as we shall see, possession of gold is quite widespread.
<p>
Second, the patriarchal tradition in Palestinian households implies that
final decision-making authority in economic affairs usually rests with the
(male) head of household. Gold is, however, most often the personal property
of women, obtained as dowry at marriage, or upon the birth of a child. This
practice is supported by Shari'a law in which a woman's dowry is specified
as her sole property.
<p>
Historically, dowry in the form of jewellery has been the main mechanism
to ensure women some form of independent economic resources. The type of
jewellery sold in the Occupied Territories and the fact that it is sold
by weight, attest to its recognized significance as liquid capital comparable
to other types of savings.
<p>
The third and fourth indicators which we used for measuring net liquid household
wealth are use of credits for daily consumption and taking up loans for
various purposes. Through the use of credits or borrowed money, even households
with no gold or other savings can break the immediate link between household
income and consumption expenditures.
<p>
The need to break this link is not necessarily rooted in a permanent decline
in household income. Some households for example those living from agriculture
have unstable income, and thus take up loans or use credits to keep consumption
expenditures stable in the face of large fluctuations.
<p>
The practice of taking up debt differs in several ways from using credits.
While credits are taken up primarily for daily consumption purposes, debt
is commonly taken up for other reasons, such as for investments in housing,
sales or production.
<p>
The sources of loans are far more diverse as well. While credits are provided
primarily by local grocery stores, loans can be obtained from family, relatives,
friends or various institutions. Those providing loans may be classified
as personal or non-personal; among personal providers, whether they represent
kinship relations or not.
<p>
<b><a name="indicators2">Indicators for net liquid household wealth
by socio-economic group</a></b>
<p>
In general we found only small regional variations in the possession of
gold and other savings. As shown by figure 3.31, about two in ten households
report having no gold, while as many as two out of three households report
that they have no savings.
<p>
The proportion of households reporting no savings <i>may</i> be exaggerated because
fear of taxation by the Israeli Civil Administration often leads to under-reporting
and concealment of assets. Among the households which reported <i>selling</i> gold
and using of other savings, roughly half had done so to obtain money for
consumption purposes, and one third for investments.
<p>
Within Gaza we found little variation in the possession and selling of gold
and use of other savings, with regard to geography and refugee status. Households
in the Northern West Bank refugee camps reported more savings and less gold
than in the Central/ Southern camps.
<p>
Also for indicators for debt and credits regional variations are relatively
small. Two out of five households in Gaza have loans, compared to three
out of five in the West Bank refugee camps; loans for housing and consumption
purposes are typical of West Bank refugee camps.
<p>
Among the households in both regions <i>who have taken up loans</i>, roughly 75%
report increased debt since the border closure. About the same proportion
say their loans are so large that they cannot easily repay them.
<p>
About half of the households in both main geographical areas buy their daily
consumption on credit. The most important reasons cited are "No regular
salary" in Gaza and "Cannot pay" in the West Bank refugee camps.
<p>
As for gold and other savings, we hardly found any variation in the indicators
for loans and credits within Gaza, neither for geography nor for refugee
status. In the West Bank refugee camps, the Northern camps have more debt,
in particular for consumption purposes. More households in the Northern
camps report increased debt since the border closure and that their loans
cannot be easily repaid.
<p>
The single most prevalent source of capital in both areas is friends. In
general, access to capital seems to be more dependent on kinship structures
(family and relatives) in Gaza than in the West Bank refugee camps. The
proportion of non-personal capital providers ("other than above") on
the contrary, is highest in the West Bank refugee camps, possibly because
of the lack of such institutions in Gaza.
<p>
Variations in sources of capital according to purpose for taking up loans
are generally small. Money for house building comes from a mixture of sources,
to a larger extent than other types of debt, probably because of the relatively
large amounts involved.
<p>
The sources of debt among the group of households with increased debt since
the border closure do not differ much from other households, and variations
in capital sources according to changes in debt are generally smaller than
between the two main geographical areas. The same goes for the group of
households with payment problems.
<p>
<b><a name="interpreting">Interpreting indicators for net liquid household wealth</a></b>
<p>
How should we interpret these indicators for net liquid wealth? Are for
example households that sell their gold and using savings, or take up loans
and credits, particularly deprived? To answer these and other similar questions,
we have correlated the indicators for net liquid wealth with the index for
household possession of consumer durables.
<p>
Because of its relative stability, the index for household possession of
consumer durables may serve as an indicator for household economic resources
before the border closure. In table 3.3, this index has been correlated
with the proportion of households possessing gold and other savings, and
the proportion of households which have sold these assets for consumption
purposes.
<p>
<I>Table 3.3 Net liquid households wealth, by index for household possession of consumer durables. Percentage of all households in respective groups</I>
<table border="1">
<tr>
<td> </td>
<td colspan="3" width="30%"><p align="center"><b>Gaza</b>
</td>
<td colspan="4" width="30%"><p align="center"><b>West Bank camps</b>
</td>
</tr>
<tr>
<td> </td>
<td colspan="7" width="60%"><p align="center">Household consumer durables by thirds
</td>
</tr>
<tr>
<td> </td>
<td><p align="center">Lower
</td>
<td><p align="center">Middle
</td>
<td colspan="2" width="10%"><p align="center">Upper
</td>
<td><p align="center">Lower
</td>
<td><p align="center">Middle
</td>
<td><p align="center">Upper
</td>
</tr>
<tr>
<td>Sold savings for daily
consumption</td>
<td><p align="center">12
</td>
<td><p align="center">16
</td>
<td colspan="2" width="10%"><p align="center">18
</td>
<td><p align="center">8
</td>
<td><p align="center">13
</td>
<td><p align="center">9
</td>
</tr>
<tr>
<td>No savings</td>
<td><p align="center">81
</td>
<td><p align="center">66
</td>
<td colspan="2" width="10%"><p align="center">49
</td>
<td><p align="center">71
</td>
<td><p align="center">65
</td>
<td><p align="center">64
</td>
</tr>
<tr>
<td>Sold gold for daily
consumption</td>
<td><p align="center">22
</td>
<td><p align="center">23
</td>
<td colspan="2" width="10%"><p align="center">15
</td>
<td><p align="center">15
</td>
<td><p align="center">13
</td>
<td><p align="center">18
</td>
</tr>
<tr>
<td>No gold</td>
<td><p align="center">15
</td>
<td><p align="center">9
</td>
<td colspan="2" width="10%"><p align="center">7
</td>
<td><p align="center">29
</td>
<td><p align="center">23
</td>
<td><p align="center">11
</td>
</tr>
<tr>
<td><b>Have debt for:</b></td>
<td> </td>
<td> </td>
<td colspan="2" width="10%"> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td>Any purpose</td>
<td><p align="center">41
</td>
<td><p align="center">44
</td>
<td colspan="2" width="10%"><p align="center">42
</td>
<td><p align="center">57
</td>
<td><p align="center">58
</td>
<td><p align="center">61
</td>
</tr>
<tr>
<td>Consumption</td>
<td><p align="center">21
</td>
<td><p align="center">18
</td>
<td colspan="2" width="10%"><p align="center">10
</td>
<td><p align="center">34
</td>
<td><p align="center">27
</td>
<td><p align="center">21
</td>
</tr>
<tr>
<td><b>Debt change since
border closure</b></td>
<td> </td>
<td> </td>
<td colspan="2" width="10%"> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td>Greater</td>
<td><p align="center">29
</td>
<td><p align="center">32
</td>
<td colspan="2" width="10%"><p align="center">24
</td>
<td><p align="center">45
</td>
<td><p align="center">40
</td>
<td><p align="center">49
</td>
</tr>
<tr>
<td>Same</td>
<td><p align="center">6
</td>
<td><p align="center">7
</td>
<td colspan="2" width="10%"><p align="center">8
</td>
<td><p align="center">10
</td>
<td><p align="center">11
</td>
<td><p align="center">6
</td>
</tr>
<tr>
<td>Smaller</td>
<td><p align="center">2
</td>
<td><p align="center">1
</td>
<td colspan="2" width="10%"><p align="center">7
</td>
<td><p align="center">1
</td>
<td><p align="center">3
</td>
<td><p align="center">6
</td>
</tr>
<tr>
<td>Not applicable</td>
<td><p align="center">4
</td>
<td><p align="center">4
</td>
<td colspan="2" width="10%"><p align="center">3
</td>
<td><p align="center">1
</td>
<td><p align="center">3
</td>
<td><p align="center">1
</td>
</tr>
<tr>
<td>No loans</td>
<td><p align="center">59
</td>
<td><p align="center">56
</td>
<td colspan="2" width="10%"><p align="center">58
</td>
<td><p align="center">43
</td>
<td><p align="center">42
</td>
<td><p align="center">39
</td>
</tr>
<tr>
<td><b>Can loans not be repaid</b></td>
<td> </td>
<td> </td>
<td colspan="2" width="10%"> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td>Yes</td>
<td><p align="center">31
</td>
<td><p align="center">33
</td>
<td colspan="2" width="10%"><p align="center">25
</td>
<td><p align="center">45
</td>
<td><p align="center">46
</td>
<td><p align="center">44
</td>
</tr>
<tr>
<td>No</td>
<td><p align="center">10
</td>
<td><p align="center">11
</td>
<td colspan="2" width="10%"><p align="center">17
</td>
<td><p align="center">11
</td>
<td><p align="center">12
</td>
<td><p align="center">17
</td>
</tr>
<tr>
<td>No loans</td>
<td><p align="center">59
</td>
<td><p align="center">56
</td>
<td colspan="2" width="10%"><p align="center">58
</td>
<td><p align="center">43
</td>
<td><p align="center">42
</td>
<td><p align="center">39
</td>
</tr>
<tr>
<td><b>Reason for credits</b></td>
<td> </td>
<td> </td>
<td colspan="2" width="10%"> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td>Cannot pay</td>
<td><p align="center">31
</td>
<td><p align="center">14
</td>
<td colspan="2" width="10%"><p align="center">10
</td>
<td><p align="center">42
</td>
<td><p align="center">28
</td>
<td><p align="center">16
</td>
</tr>
<tr>
<td>Long-time practice</td>
<td><p align="center">5
</td>
<td><p align="center">6
</td>
<td colspan="2" width="10%"><p align="center">8
</td>
<td><p align="center">7
</td>
<td><p align="center">8
</td>
<td><p align="center">5
</td>
</tr>
<tr>
<td>No regular salary</td>
<td><p align="center">19
</td>
<td><p align="center">27
</td>
<td colspan="2" width="10%"><p align="center">24
</td>
<td><p align="center">14
</td>
<td><p align="center">11
</td>
<td><p align="center">12
</td>
</tr>
<tr>
<td>Other</td>
<td><p align="center">1
</td>
<td><p align="center">5
</td>
<td colspan="2" width="10%"><p align="center">10
</td>
<td><p align="center">1
</td>
<td><p align="center">3
</td>
<td><p align="center">3
</td>
</tr>
<tr>
<td>No credits</td>
<td><p align="center">44
</td>
<td><p align="center">48
</td>
<td colspan="2" width="10%"><p align="center">48
</td>
<td><p align="center">36
</td>
<td><p align="center">50
</td>
<td><p align="center">63
</td>
</tr>
<tr>
<td>n</td>
<td><p align="center">365
</td>
<td><p align="center">323
</td>
<td colspan="2" width="10%"><p align="center">267
</td>
<td><p align="center">231
</td>
<td><p align="center">168
</td>
<td><p align="center">98
</td>
</tr>
</table>
<br><br>
The proportion of households possessing gold and other savings naturally
increases with the score on the index for household possession of consumer
durables. However, we find no systematic variation concerning the households
selling gold and using other savings for consumption purposes. Such sales
are thus possible but not indisputable indicators for particular economic
deprivation. The poorest households seem to be characterized by having neither
gold nor savings, rather than by selling gold and using savings for consumption
purposes.
<p>
As shown by table 3.3, taking up debt is in itself not necessarily a sign
of <i>particularly</i> serious economic deprivation. Taking up debt for consumption
purposes, however, seem to be a coping strategy used especially by the poorest
households.
<p>
Table 3.3 also shows that the vast majority of households with loans have
increased their debt after the border closure, regardless of their score
on the index for household possession of consumer durables. There is also
little correlation between having repayment problems, source of loans, and
score on index.
<p>
That also a high proportion of households in the upper wealth group reports
repayment problems may be because the index for household possession of
consumer durables reflects <i>both</i> former and present income levels. It may
also indicate that the economic crisis has hit all types of households,
but until now has not compelled those households which are <i>relatively</i> best
off to sell their consumer durables.
<p>
Finally, does taking up credits for daily consumption indicate particular
economic deprivation? Table 3.3 shows that in Gaza there is little variation
in the prevalence of households using credits, in terms of the index for
household possession of consumer durables. In the West Bank refugee camps,
however, the proportion of households using credits decreases rather sharply
with the index.
<p>
The proportion of households taking up credits because they "cannot
pay" decrease with increasing household wealth in both main geographical
areas. That also some households in the upper wealth group report taking
up credits for this reason is most probably because the index for household
possession of consumer durables reflects <i>both</i> former and current income
levels.
<p>
Neither in Gaza nor in the West Bank refugee camps does taking up credits
because of irregular salary seem particularly associated with low wealth.
The same goes for households taking up credits as a long-time practice or
for other reasons. In contrast to households taking up credits because they
"cannot pay", taking up credits as such is thus not necessarily a sign
of particular economic deprivation.
<p>
Investigating the typical time-sequence involved in selling gold and using
other savings or taking up debt and credits is an alternative way of finding
out which measures indicate particular deprivation. Figure 3.31 presents
two examples of typical time-sequences for sale of gold, use of other savings,
taking up loans for consumption purposes and using credits for consumption
purposes.
<p>
<I>Figure 3.31 Time sequence for reduction of net liquid wealth</I><br>
<img src="bilder/331.gif">
<p>
The underlying assumption is that all households may take up debt and credits
for consumption purposes, but that many households do not possess gold or
other savings.
<p>
The typical time-sequence in reducing net liquid wealth among households
which <i>do</i> possess gold or other savings is to start using savings, then to
take up credits for consumption purposes, third to sell gold, and finally
to take up debt for consumption purposes.
<p>
Among <i>all</i> households, taking up debt for consumption purposes is still the
last measure to be implemented. Because many households do not possess gold
or other savings, taking up credits for consumption purposes comes first.<p>
The finding that taking up debt for consumption purposes is the last measure
to be implemented both among households with gold or other savings, and
among all households is in line with our earlier finding that the proportions
of households using this measure increases with decreasing score on the
index for household possession of consumer durables. <a href="notes_3.html#4"><small><sup>4</sup></small></a>
<p>
<b><a name="net">Net liquid household wealth and employment problems among household members</a></b>
<p>
Let us now return to the "family capital network" hypothesis which,
as mentioned, concerns the relationship between changes in net liquid household
wealth and employment problems among household members.
<p>
Do individuals facing employment problems also rely on a reduction in net
liquid household wealth for survival? May this adaptation strategy further
help to explain the seemingly low downward shift in worker reservation wages?
<p>
We have compared the indicators for net liquid household wealth between
households with at least one "discouraged" or unemployed worker, and
other households.
<p>
Table 3.4 shows that households with "discouraged workers" have more
debt, in particular for consumption purposes, than other households. It
can further be seen that as many as 80% of these households have increased
their debt since the border closure, an even higher figure than for other
households. Finally, table 3.4 shows that more households with "discouraged
workers" use credit for consumption purposes, and that these households more
often cite "cannot pay" as the primary reason for taking up credits.
<p>
<I>Table 3.4 Net liquid households wealth, by main geographical area and discouraged worker in household. Percentage of all households in respective groups</I>
<table border="1">
<tr>
<td> </td>
<td colspan="2" width="34%"><p align="center"><b>Gaza</b>
</td>
<td colspan="2" width="34%"><p align="center"><b>West Bank Camps</b>
</td>
</tr>
<tr>
<td> </td>
<td colspan="4" width="69%"><p align="center">Discouraged worker in household?
</td>
</tr>
<tr>
<td> </td>
<td><p align="center">No
</td>
<td><p align="center">Yes
</td>
<td><p align="center">No
</td>
<td><p align="center">Yes
</td>
</tr>
<tr>
<td><b>Have debt for:</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td>Any purpose</td>
<td><p align="center">41
</td>
<td><p align="center">47
</td>
<td><p align="center">53
</td>
<td><p align="center">69
</td>
</tr>
<tr>
<td>Consumption</td>
<td><p align="center">15
</td>
<td><p align="center">22
</td>
<td><p align="center">26
</td>
<td><p align="center">35
</td>
</tr>
<tr>
<td><b>Debt change since
border closure</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td>Greater</td>
<td><p align="center">25
</td>
<td><p align="center">37
</td>
<td><p align="center">39
</td>
<td><p align="center">56
</td>
</tr>
<tr>
<td>Same</td>
<td><p align="center">7
</td>
<td><p align="center">7
</td>
<td><p align="center">10
</td>
<td><p align="center">9
</td>
</tr>
<tr>
<td>Smaller</td>
<td><p align="center">4
</td>
<td><p align="center">1
</td>
<td><p align="center">3
</td>
<td><p align="center">2
</td>
</tr>
<tr>
<td>Not applicable</td>
<td><p align="center">5
</td>
<td><p align="center">1
</td>
<td><p align="center">1
</td>
<td><p align="center">2
</td>
</tr>
<tr>
<td>No loans</td>
<td><p align="center">59
</td>
<td><p align="center">53
</td>
<td><p align="center">47
</td>
<td><p align="center">31
</td>
</tr>
<tr>
<td><b>Reason for credits</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td>Cannot pay</td>
<td><p align="center">15
</td>
<td><p align="center">29
</td>
<td><p align="center">30
</td>
<td><p align="center">37
</td>
</tr>
<tr>
<td>Long-time practice</td>
<td><p align="center">6
</td>
<td><p align="center">6
</td>
<td><p align="center">6
</td>
<td><p align="center">10
</td>
</tr>
<tr>
<td>No regular salary</td>
<td><p align="center">22
</td>
<td><p align="center">26
</td>
<td><p align="center">12
</td>
<td><p align="center">14
</td>
</tr>
<tr>
<td>Other</td>
<td><p align="center">6
</td>
<td><p align="center">3
</td>
<td><p align="center">2
</td>
<td><p align="center">3
</td>
</tr>
<tr>
<td>No credits</td>
<td><p align="center">50
</td>
<td><p align="center">36
</td>
<td><p align="center">50
</td>
<td><p align="center">37
</td>
</tr>
<tr>
<td>n</td>
<td><p align="center">681
</td>
<td><p align="center">268
</td>
<td><p align="center">337
</td>
<td><p align="center">157
</td>
</tr>
</table>
<br><br>
For possession of gold and other savings, and sale of these assets for consumption
purposes, households with "discouraged workers" have the same scores
as the overall average for the sample. The (much smaller group of) households
with unemployed workers show roughly the same distribution with regard to
indicators for net liquid household wealth as do households with "discouraged
workers".
<p>
These results give no reason to reject the "family capital network"
hypothesis. Many households in the sample seem to use reduction of net liquid
wealth as a strategy for adapting to the effects of the border closure.
Households with "discouraged" and unemployed workers tend to reduce
their net liquid wealth even more than other households.
<p>
Individuals facing employment problems thus also seem to rely on reduction
in net liquid household wealth for survival. This may help explain why there
has been so little of evidence a downward shift in the reservation wages
of "discouraged" and unemployed workers.
<p>
<b><a name="reducing">Reducing net liquid wealth as coping strategy:
Household prototypes</a></b>
<p>
Most households with "discouraged" or unemployed workers may be assumed
to be more adversely affected by the border closure than other households.
Below we will use these and other groups of households as prototypes in
discussing the role of net liquid wealth in household adaptation strategies.
<p>
The various prototypes will be grouped rather <i>crudely</i> according to assumptions
about their economic situation prior to the border closure, and how much
they are assumed to be affected by the closure. Figure 3.32 gives an overview
of theoretical prototypes, and the groups of households which will be used
as empirical indicators.
<p>
<I>Figure 3.32 Reduction of net wealth as coping strategy, household prototypes</I><br>
<img src="bilder/332.gif">
<p>
As noted before, the labour force classification of household members refers
to the week immediately prior to the survey, but we assume that both many
of the households without labour-force members, and many of those with at
least one full-time worker, have been in this situation for some time.
<p>
In the section about household income types, we found that female headed
households tended to rely more on non-labour income from public sources
than other households. This type of income has been relatively little affected
by the border closure. Households with female heads have thus been classified
together with households without labour-force members and households with
at least one full-time worker, into a group of households where the affects
of the border closure are assumed to be <i>less</i> than average.
<p>
On the other hand we have the three partially overlapping groups of large
households, households with "discouraged" or unemployed workers, and
households with members who lost employment in Israel from 1992 to 1993.
These are assumed to have been <i>more</i> adversely affected than the average
by the border closure. <a href="notes_3.html#5"><small><sup>5</sup></small></a>
<p>
Additionally, the various household groups have been classified according
to assumptions about their level of economic resources prior to closure.
The index for household possession of consumer durables has been the main
tool utilized here.
<p>
Large households and households with at least one full-time worker both
have <i>above</i> average scores on the index for household possession of consumer
durables. Households with "discouraged" or unemployed workers score
close to average, while households without labour-force members, or with
female head of household, have <i>below</i> average scores on the index.
<p>
These two dimensions - <I>pre-closure economic level</I> and <I>degree of adverse influence
by the border closure</I> - together form a matrix of four theoretical prototypes
of households. We have, however, no empirical indicator for the prototype
of households with a below-average pre-closure economic level and which
are more adversely affected by the closure than the average ones.
<p>
It should further be noted that these groups of households are heterogenous,
and that they thus only partially satisfy empirical indicators for the theoretical
prototypes of households outlined in our classification table. (Some households
headed by women, or households without labour-force members, must for example
be assumed to belong to the now empty group noted above.
<p>
Given these initial reservations, we now turn to the role of net liquid
household wealth as coping strategy among households in each of the three
remaining theoretical prototypes.
<p>
The first prototype, characterized by above-average pre-closure economic
level and by being less adversely affected by the closure than average,
is represented by households in which there is at least <i>one full-time worker</i>.
<p>
These households more frequently possess gold and other savings than do
other households. The proportion that has taken up loans is about the same
as for other households, but relatively more of these loans has been obtained
for housing purposes, and less for consumption purposes. Finally, these
households do not use credits to a smaller degree for daily consumption
purposes than others do, and they do not cite "cannot pay" less often
as the primary reason for taking up credits.
<p>
The second prototype consists of households with above-average pre-closure
economic level and which are more adversely affected by the closure than
average. Here we find large households, households with members who lost
employment in Israel from 1992 to 1993, and households with one or more
"discouraged or unemployed workers. As can be seen from table 3.5,
the distribution of indicators for net liquid household wealth among <i>large
households</i> resembles the distribution among households with "<i>discouraged"
or unemployed workers</i>.
<p>
<I>Table 3.5 Net liquid households wealth, by main geographical area and no. of persons in household. Percentage of all households in respective groups</I>
<table border="1">
<tr>
<td> </td>
<td colspan="4" width="35%"><p align="center"><b>Gaza</b>
</td>
<td colspan="3" width="35%"><p align="center"><b>West Bank camps</b>
</td>
</tr>
<tr>
<td> </td>
<td colspan="7" width="70%"><p align="center">Total number of persons in household?
</td>
</tr>
<tr>
<td> </td>
<td><p align="center">1 - 5
</td>
<td><p align="center">6 - 10
</td>
<td><p align="center">11 or
more
</td>
<td colspan="2" width="12%"><p align="center">1 - 5
</td>
<td><p align="center">6 - 10
</td>
<td><p align="center">11 or
more
</td>
</tr>
<tr>
<td><b>Debt change since
border closure</b></td>
<td> </td>
<td> </td>
<td> </td>
<td colspan="2" width="12%"> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td>Greater</td>
<td><p align="center">21
</td>
<td><p align="center">30
</td>
<td><p align="center">36
</td>
<td colspan="2" width="12%"><p align="center">38
</td>
<td><p align="center">45
</td>
<td><p align="center">59
</td>
</tr>
<tr>
<td>Same</td>
<td><p align="center">5
</td>
<td><p align="center">7
</td>
<td><p align="center">9
</td>
<td colspan="2" width="12%"><p align="center">8
</td>
<td><p align="center">10
</td>
<td><p align="center">12
</td>
</tr>
<tr>
<td>Smaller</td>
<td><p align="center">2
</td>
<td><p align="center">3
</td>
<td><p align="center">5
</td>
<td colspan="2" width="12%"><p align="center">4
</td>
<td><p align="center">2
</td>
<td><p align="center">4
</td>
</tr>
<tr>
<td>Not applicable</td>
<td><p align="center">6
</td>
<td><p align="center">3
</td>
<td><p align="center">2
</td>
<td colspan="2" width="12%"><p align="center">2
</td>
<td><p align="center">2
</td>
<td> </td>
</tr>
<tr>
<td>No loans</td>
<td><p align="center">66
</td>
<td><p align="center">57
</td>
<td><p align="center">48
</td>
<td colspan="2" width="12%"><p align="center">48
</td>
<td><p align="center">42
</td>
<td><p align="center">25
</td>
</tr>
<tr>
<td><b>Difficulty repaying
loans</b></td>
<td> </td>
<td> </td>
<td> </td>
<td colspan="2" width="12%"> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td>Yes</td>
<td><p align="center">26
</td>
<td><p align="center">30
</td>
<td><p align="center">36
</td>
<td colspan="2" width="12%"><p align="center">38
</td>
<td><p align="center">46
</td>
<td><p align="center">63
</td>
</tr>
<tr>
<td>No</td>
<td><p align="center">8
</td>
<td><p align="center">13
</td>
<td><p align="center">17
</td>
<td colspan="2" width="12%"><p align="center">14
</td>
<td><p align="center">12
</td>
<td><p align="center">12
</td>
</tr>
<tr>
<td>No loans</td>
<td><p align="center">66
</td>
<td><p align="center">57
</td>
<td><p align="center">48
</td>
<td colspan="2" width="12%"><p align="center">48
</td>
<td><p align="center">42
</td>
<td><p align="center">25
</td>
</tr>
<tr>
<td><b>Reason for credits</b></td>
<td> </td>
<td> </td>
<td> </td>
<td colspan="2" width="12%"> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td>Cannot pay</td>
<td><p align="center">16
</td>
<td><p align="center">20
</td>
<td><p align="center">22
</td>
<td colspan="2" width="12%"><p align="center">27
</td>
<td><p align="center">34
</td>
<td><p align="center">40
</td>
</tr>
<tr>
<td>Long-time practice</td>
<td><p align="center">7
</td>
<td><p align="center">6
</td>
<td><p align="center">6
</td>
<td colspan="2" width="12%"><p align="center">5
</td>
<td><p align="center">8
</td>
<td><p align="center">6
</td>
</tr>
<tr>
<td>No regular salary</td>
<td><p align="center">17
</td>
<td><p align="center">25
</td>
<td><p align="center">28
</td>
<td colspan="2" width="12%"><p align="center">11
</td>
<td><p align="center">14
</td>
<td><p align="center">13
</td>
</tr>
<tr>
<td>Other</td>
<td><p align="center">3
</td>
<td><p align="center">4
</td>
<td><p align="center">10
</td>
<td colspan="2" width="12%"><p align="center">1
</td>
<td><p align="center">1
</td>
<td><p align="center">8
</td>
</tr>
<tr>
<td>No credits</td>
<td><p align="center">58
</td>
<td><p align="center">44
</td>
<td><p align="center">34
</td>
<td colspan="2" width="12%"><p align="center">55
</td>
<td><p align="center">43
</td>
<td><p align="center">33
</td>
</tr>
<tr>
<td>n</td>
<td><p align="center">297
</td>
<td><p align="center">462
</td>
<td><p align="center">195
</td>
<td colspan="2" width="12%"><p align="center">186
</td>
<td><p align="center">248
</td>
<td><p align="center">62
</td>
</tr>
</table>
<br><br>
Relative to small households, more large households have debt for consumption
purposes, and a higher proportion have debt which they now find difficult
to repay. Further, these households tend to use credits for daily consumption
purposes, and more often cite "cannot pay" as the primary reason for
taking up credits.
<p>
In Gaza, "large" households also have more gold and savings than small
households. In the West Bank refugee camps, there is little variation in
possession of gold and savings in terms of household size, perhaps because
the most "wealthy" households have moved out. The profile of net liquid
wealth indicators among households with <i>members who lost employment in Israel</i>
resembles that of large households, but there seem to be even greater adverse
changes in net liquid household wealth. This group has the largest proportion
of households possessing gold and other savings, reflecting the <i>relatively</i>
high remuneration of employment in Israel.
<p>
The third and final prototype is constituted by households with pre-closure
economic level below average, assumed to be less than average adversely
affected by the Closure. It is here we find the households <i>without labour-force
members</i> and households <i>headed by women</i>.
<p>
Relative to other households, a lower proportion in these two groups of
households possess gold and other savings. Further, these households have
less debt, in particular for consumption purposes; they less often use credits
for daily consumption purposes, and less often cite "cannot pay" as
the primary reason for taking up credits than other households do. Finally,
fewer households without labour-force members, or with female heads, have
greater debt now than before the border closure, or loans which are difficult
to repay.
<p>
A possible explanation for the samll use of debt and credits among households
with female heads may be found on the supply side of the capital market.
Many households which take up credits as a long-standing practice, or because
they have irregular salary incomes, have close family or social connections
with shop owners. Many female-headed households have less comprehensive
family connections, and their access to credits in shops may be more restricted.
<p>
Table 3.6 shows the net liquid wealth indicator profile of the most "extreme"
of the two groups of households of the third theoretical prototype, households
with female heads.
<p>
<I>Table 3.6 Net liquid households wealth, by main geographical area and head of households gender. Percentage of all households in respective groups</I>
<table border="1">
<tr>
<td> </td>
<td colspan="2" width="38%"><p align="center"><b>Gaza</b>
</td>
<td colspan="2" width="38%"><p align="center"><b>West Bank camps</b>
</td>
</tr>
<tr>
<td> </td>
<td><p align="center">Male
</td>
<td><p align="center">Female
</td>
<td><p align="center">Male
</td>
<td><p align="center">Female
</td>
</tr>
<tr>
<td>No savings</td>
<td><p align="center">66
</td>
<td><p align="center">84
</td>
<td><p align="center">66
</td>
<td><p align="center">86
</td>
</tr>
<tr>
<td>No gold</td>
<td><p align="center">9
</td>
<td><p align="center">29
</td>
<td><p align="center">20
</td>
<td><p align="center">51
</td>
</tr>
<tr>
<td><b>Have debt for:</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td>Any purpose</td>
<td><p align="center">44
</td>
<td><p align="center">26
</td>
<td><p align="center">59
</td>
<td><p align="center">47
</td>
</tr>
<tr>
<td>Consumption</td>
<td><p align="center">18
</td>
<td><p align="center">7
</td>
<td><p align="center">30
</td>
<td><p align="center">24
</td>
</tr>
<tr>
<td><b>Debt change since
border closure</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td>Greater</td>
<td><p align="center">30
</td>
<td><p align="center">16
</td>
<td><p align="center">47
</td>
<td><p align="center">24
</td>
</tr>
<tr>
<td>Same</td>
<td><p align="center">7
</td>
<td><p align="center">6
</td>
<td><p align="center">9
</td>
<td><p align="center">16
</td>
</tr>
<tr>
<td>Smaller</td>
<td><p align="center">3
</td>
<td><p align="center">1
</td>
<td><p align="center">2
</td>
<td><p align="center">6
</td>
</tr>
<tr>
<td>Not applicable</td>
<td><p align="center">4
</td>
<td><p align="center">4
</td>
<td><p align="center">1
</td>
<td><p align="center">2
</td>
</tr>
<tr>
<td>No loans</td>
<td><p align="center">56
</td>
<td><p align="center">74
</td>
<td><p align="center">41
</td>
<td><p align="center">53
</td>
</tr>
<tr>
<td><b>Reason for credits</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td>Cannot pay</td>
<td><p align="center">19
</td>
<td><p align="center">22
</td>
<td><p align="center">32
</td>
<td><p align="center">39
</td>
</tr>
<tr>
<td>Long-time practice</td>
<td><p align="center">7
</td>
<td><p align="center">3
</td>
<td><p align="center">8
</td>
<td> </td>
</tr>
<tr>
<td>No regular salary</td>
<td><p align="center">25
</td>
<td><p align="center">10
</td>
<td><p align="center">13
</td>
<td><p align="center">8
</td>
</tr>
<tr>
<td>Other</td>
<td><p align="center">6
</td>
<td><p align="center">1
</td>
<td><p align="center">2
</td>
<td> </td>
</tr>
<tr>
<td>No credits</td>
<td><p align="center">44
</td>
<td><p align="center">65
</td>
<td><p align="center">45
</td>
<td><p align="center">53
</td>
</tr>
<tr>
<td>n</td>
<td><p align="center">848
</td>
<td><p align="center">97
</td>
<td><p align="center">444
</td>
<td><p align="center">48
</td>
</tr>
</table>
<br><br>
Let us now sum up the role played by net liquid household wealth in coping
strategies in each of the three theoretical prototypes.
<p>
Among the first prototype, empirically represented by households with at
least one full-time worker, relatively stable labour income reduces the
need to draw on net liquid household wealth. These households are <i>relatively</i>
well off, and their best "adaptation strategy" is to uphold the income
flow from labour activity.
<p>
Households of the third prototype, empirically represented by those without
labour-force members or households headed by females, may in general be
assumed <i>already to have adapted</i> to a minimum level of consumption expenditures.
Relatively few of these households possess gold or other savings. Their
use of (and possibly access to) loans and credits is further constrained
because of their more limited access to capital, compared to households
from larger family structures. Thus, the situation of these households illustrates
that reducing net liquid household wealth may be used as a short-term coping
strategy only.
<p>
The second prototype, empirically represented by large households, those
with "discouraged" or unemployed workers, and those with members who
lost employment in Israel from 1992 to 1993, would seem to rely most heavily
on reducing net liquid wealth as a household coping strategy. These households
do not yet seem to have adjusted consumption expenditures down to the lower
level found among households in the third prototype. For large households,
such reductions may also be extremely difficult, because they have a higher
minimum level of consumption expenditures.
<p>
Reducing net liquid wealth represents, as stated above, only a short-term
household coping strategy. Households of this prototype are thus crucially
dependent on improved income opportunities in the near future. If such an
improvement fails to materialize, their drift towards the situation characterizing
households headed by females, can hardly be stopped.
<!-- end body text -->
</td>
</tr>
<tr>
<td align = center>
<a href="_._.html"><img src="../../../../../../../sys/almashriq-bottom-line.gif"alt = "----------------" border= 0></a><p><pre>
<a href="../../../../../../../base/mailpage.html">al@mashriq</a> 961216</pre>
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