The Impact of Insurance Provision on Household Production and Financial Decisions

• 成果类型: Article
• 署名作者: Cai, Jing
• 署名单位: University of Michigan System; University of Michigan
• 刊物名称: AMERICAN ECONOMIC JOURNAL-ECONOMIC POLICY
• ISSN/ISSBN: 1945-7731
• DOI: 10.1257/pol.20130371
• 发表日期: 2016
• 页码: 44-88
• 关键词: technology adoption; rural india; RISK; credit; constraints; investments; countries

摘要

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.