American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
The Impact of Insurance Provision on Household Production and Financial Decisions
American Economic Journal: Economic Policy
vol. 8,
no. 2, May 2016
(pp. 44–88)
Abstract
This paper uses a natural experiment to study the impact of an agricultural insurance program on household production, borrowing, and saving behavior. The empirical strategy includes difference-in-differences and triple difference estimations. The results show that insurance provision increases the insured crop production by 16 percent and raises borrowing by 29 percent. Interestingly, it does not affect total household savings; however, it does affect the relative proportion of flexible-term savings. Furthermore, effects on production and savings persist in the long run, while effects on borrowing are significant in only the medium run. Lastly, calibration results suggest that the policy is both welfare improving and cost-effective. (JEL D13, D14, G22, O16, P32, P36, Q12)Citation
Cai, Jing. 2016. "The Impact of Insurance Provision on Household Production and Financial Decisions." American Economic Journal: Economic Policy, 8 (2): 44–88. DOI: 10.1257/pol.20130371Additional Materials
JEL Classification
- D13 Household Production and Intrahousehold Allocation
- D14 Household Saving; Personal Finance
- G22 Insurance; Insurance Companies; Actuarial Studies
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- P32 Collectives; Communes; Agriculture
- P36 Socialist Institutions and Their Transitions: Consumer Economics; Health; Education and Training: Welfare, Income, Wealth, and Poverty
- Q12 Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
There are no comments for this article.
Login to Comment