Does agricultural insurance help farmers escape the poverty trap? Research based on multiple equilibrium models

Pu Liao (), Xianhua Zhou () and Qingquan Fan ()
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Pu Liao: China Institute for Actuarial Science/School of Insurance, Central University of Finance and Economics
Xianhua Zhou: China Institute for Actuarial Science/School of Insurance, Central University of Finance and Economics
Qingquan Fan: Captial University of Economics and Business

The Geneva Papers on Risk and Insurance - Issues and Practice, 2020, vol. 45, issue 1, No 10, 203-223

Abstract: Abstract This paper considers a risk poverty trap model in which technology adoption depends on the individual’s capital level. Agricultural insurance and premium subsidies are then introduced to analyse poverty alleviation resulting from agricultural insurance. For individuals with capital above a threshold, insurance can be helpful, since it lets them stay above the threshold. Agricultural insurance does not help peasants escape deep poverty, because premiums keep them below the threshold. Moreover, premium subsidies would strengthen the poverty reduction resulting from insurance, as the increased income and the risk elimination would move some peasants above the critical threshold.

Keywords: Agricultural insurance; Poverty trap; Multiple equilibrium; Ruin probability (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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DOI: 10.1057/s41288-019-00150-w

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