Shocks and Coping Strategies in the Urban Squatter Settlements of San Salvador

Abstract

AbstractThis article provides an assessment of shocks and coping strategies in the urban squatter settlements of San Salvador. Using a multi‐shocks household survey, it is shown that shocks like flooding, landslide, increase in food prices, insecurity, and illness or serious casualty prevail in these areas. Regression results show no significant effects of shocks on current consumption, which may indicate the existence of household consumption‐smoothing behavior. Hence, although coping responses to shocks may be efficient in the short term, covariate shocks may have adverse effects on well‐being in the longer run, especially if households decide to lower food, health, or education expenditures. Indeed, behavior‐based strategies appear to be very common when the shock is an increase in food prices, whereas assistance‐based strategies are more common when households are hit by flooding or landslide.