Insurance Market Efficiency and Crop Choices in Pakistan

Takashi Kurosaki and Marcel Fafchamps

Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: This paper tests the efficiency of insurance markets in the Pakistan Punjab by examining how crop choices are affected by the presence of price and yield risk. We estimate reduced-form and structural models of crop choices. Aithough we cannot reject the hypothesis that village members efficiently share risk among themselves, production choices are shown to depend on risk. Existing risk sharing and self-insurance mechanisms thus imperfectly protect Punjab farmers against village-level shocks. Results also indicate that households respond to consumption and input price risk, thereby suggesting that empirical and theoretical work on risk should avoid putting an exclusive emphasis on yield and output price risk.

Keywords: risk; agricultural development; household models; insurance markets; structural estimation. (search for similar items in EconPapers)
JEL-codes: Q12 (search for similar items in EconPapers)
Date: 1998-11
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Related works:
Journal Article: Insurance market efficiency and crop choices in Pakistan (2002)
Working Paper: Insurance Market Efficiency and Crop Choices in Pakistan (2000)
Working Paper: Insurance Market Efficiency and Crop Choices in Pakistan (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hituec:a358

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