Too Certain to Invest? Public Safety Nets and Insurance Markets in Ethiopia

Maya Joan Duru

World Development, 2016, vol. 78, issue C, 37-51

Abstract: Researchers’ efforts to introduce index insurance in developing countries have met with little demand despite its great potential to help farmers mitigate economic risk. I argue that researchers have overlooked institutional context’s critical role in the formation of private markets when designing insurance contracts. Using micro-level evidence from Ethiopia, I show that recipients of a preexisting effective, large-scale public safety net fail to take-up a new highly subsidized private insurance offer. Government safety net programs can decrease demand for private index insurance, forming an additional barrier to index insurance take-up. A direct implication of this research is that policymakers should design private and public insurance products that account for, or even complement, each other.

Keywords: index insurance; safety net; institutional context; Africa; Ethiopia (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:78:y:2016:i:c:p:37-51

DOI: 10.1016/j.worlddev.2015.10.034

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