Growing Apart: Declining Within- and Across-Locality Insurance in Rural China

Yu Zheng, Orazio Attanasio, Costas Meghir and Corina Mommaerts

No 16654, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We consider risk sharing in rural China during rapid economic transformation from the late 1980s through the late 2000s. We document an erosion of consumption insurance against both household-level idiosyncratic and village-level aggregate income shocks, and show that this decline is related to observable economic changes: the shift from agriculture to wage employment, the decline of publicly owned Township-and-Village Enterprises, and increased migrant work. Further evidence suggests that as these changes took place at the village level, higher levels of government failed to offset these effects through the tax-and-transfer system, leaving households more exposed to both idiosyncratic and village-aggregate shocks.

Keywords: Consumption insurance; Risk-sharing; Rural china (search for similar items in EconPapers)
JEL-codes: D12 E21 H71 O11 O12 (search for similar items in EconPapers)
Date: 2021-10
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Related works:
Journal Article: Growing apart: Declining within- and across-locality insurance in rural China (2025)
Working Paper: Growing Apart: Declining Within- and Across-Locality Insurance in Rural China (2022)
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