Does agricultural insurance help farmers escape the poverty trap? Research based on multiple equilibrium models
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This paper considers a risk poverty trap model in which technology adoption depends on the individual’s capital level. Agricultural insurance and premium subsidies are then introduced to analyse poverty alleviation resulting from agricultural insurance. For individuals with capital above a threshold, insurance can be helpful, since it lets them stay above the threshold. Agricultural insurance does not help peasants escape deep poverty, because premiums keep them below the threshold. Moreover, premium subsidies would strengthen the poverty reduction resulting from insurance, as the increased income and the risk elimination would move some peasants above the critical threshold.
KeywordsAgricultural insurance Poverty trap Multiple equilibrium Ruin probability
The research is supported by the Social Science Foundation of China (Grant No. 17CSH018), Beijing Social Science Foundation (Grant No. 17LJB007), the Program for Innovation Research and the Training Program for Youth Talents (QYP1909) in Central University of Finance and Economics.
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