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Contents Introduction

Economic shocks, let them be normal business cycles, financial crises, or economic restruchring happen all the time, especially in a developing world. During recent Asian Crises one has obseved enough indeviduals and households who experienced difficult periods. Some of them even permanently fell into unemployment and a poverty trap. Every shock may enlarge income inequality in a society. Unlike developed countries, most developing economies do not have financial power to redistribute income. In addition, they may not reach the stage where they can sacrifice efficiency for equality. As a result, how to deal with an income ineqality problem, and how to vetter help the individuals and households most severely affected to pull through is often a very important policy issue for developing countries.