How Do Health and Social Insurance Programmes Affect the Land and Labour Allocations of Farm Households? Evidence from Taiwan

Hung-Hao Chang, Chad Meyerhoefer and David Just

Journal of Agricultural Economics, 2014, vol. 65, issue 1, 68-86

Abstract: type="main" xml:id="jage12041-abs-0001">

To protect farmers from health care costs and risks to livelihood, most countries have developed special health and social insurance programmes specifically for farmers. While numerous studies have examined the determinants of participation in these programmes, little is known about how they influence famers' land and labour allocations. Without government-sponsored health and social insurance, farmers may seek off-farm employment in order to obtain similar benefits. Conditioning eligibility for social insurance on minimum land holdings and on-farm work days can lead to delayed retirement and other forms of job lock. We investigate these issues using a unique dataset of 703,287 farms in Taiwan. After controlling for non-random participation in Taiwan's social insurance programme, we find that the programme increases (decreases) on (off) farm labour supply, and decreases the amount of set-aside land. This suggests that payments from social insurance substitute for those issued through land set-aside programmes to some extent, and that failing to account for this substitution increases the cost of achieving both programmes' objectives.

Date: 2014
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