Information from the abstract
Agricultural insurance has become an important policy instrument for managing agricultural risks and strengthening rural resilience, yet its implications for rural labor allocation remain insufficiently understood, particularly during major economic shocks. This study examines how agricultural insurance affects agricultural employment under different economic conditions. We develop a theoretical framework based on risk-averse farm households to illustrate how agricultural insurance influences labor allocation through risk reduction. Empirically, we use provincial panel data covering 31 regions in China from 2007 to 2023 and estimate a two-way fixed-effects model with an interaction term capturing major economic shocks, using the COVID-19 pandemic as an empirical case. The results show that agricultural insurance is significantly associated with a decline in agricultural employment during normal economic periods, suggesting that improved risk protection relaxes risk constraints and facilitates the reallocation of rural labor from agriculture to non-agricultural sectors. However, this negative effect weakens markedly during major economic shocks, indicating that agricultural insurance helps stabilize rural employment when non-farm opportunities contract. A range of robustness checks and endogeneity tests support these findings. Overall, the results suggest that agricultural insurance plays dual roles in rural labor markets by promoting labor reallocation in normal periods while stabilizing employment during economic shocks. These findings highlight the importance of improving the design and targeting of agricultural insurance to enhance rural labor market resilience during major economic shocks.
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Related topics: Agricultural risk and resilience · Land Rights and Reforms · Insurance and Financial Risk Management
Thai researcher and institutional participation
Xin Wang · Dhurakij Pundit University
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