Insurance and Poverty Reduction: Evidence from Philippine Urban and Rural Households

Medrano Pia

MPRA Paper from University Library of Munich, Germany

Abstract: The poor are the most vulnerable class to risks and shocks and yet are also the least likely to be insured. In this essay, I explore the relationship between insurance and poverty reduction using a nationally representative household panel data from the Philippines. I find that the main pathway through which insurance coverage diminishes vulnerability to poverty is by aiding already non-poor households from falling into poverty in the face of shocks. In contrast, insurance coverage is insignificant in aiding escape from poverty among already poor households. However, a difference-in-difference (DID) analysis that exploit the occurrence of super-typhoon Reming in 2006 in the Bicol region of the Philippines suggest that insurance coverage enabled poor households to escape from poverty in the face of a natural disaster. Hence, while insurance may not be a magic cure to fundamental roots of poverty, it remains a critical tool in diminishing the exposure to poverty of the most vulnerable sectors of Philippine society.

Keywords: Insurance; Poverty; Shock (search for similar items in EconPapers)
JEL-codes: I3 I32 R2 (search for similar items in EconPapers)
Date: 2022-03-16
New Economics Papers: this item is included in nep-dev, nep-fdg, nep-ias and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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