Local elections and consumption insurance: evidence from Chinese villages

Li Gan (), Lixin Colin Xu () and Yang Yao

No 4205, Policy Research Working Paper Series from The World Bank

Abstract: While the literature on consumption insurance is growing fast, little research has been conducted on how rural consumption insurance is affected by democracy. In this paper the authors examine how consumption insurance of Chinese rural residents is affected if the local leader is democratically elected. Exploring a unique panel data set of 1,400 households from 1987 to 2002, they find that consumption insurance is more complete when the households are in villages with elected village leaders. Furthermore, democracy improves consumption insurance only for the poor and middle-income farmers, but not for the rich. These findings underline the importance of democratic governance for ensuring better rural consumption insurance and poverty reduction.

Keywords: Rural Poverty Reduction; Consumption; Inequality; Services&Transfers to Poor; Economic Theory&Research (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-dev, nep-ias and nep-pol
Date: 2007-04-01

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