THE EFFECT OF MICROINSURANCE ON ECONOMIC ACTIVITIES: EVIDENCE FROM A RANDOMIZED FIELD EXPERIMENT

We report results from a large, randomized field to study how access to formal microinsurance affects production and economic development. We induce exogenous variation in insurance coverage at the village level by randomly assigning performance incentives to the village animal husbandry worker who is responsible for signing farmers up for the insurance. We find that promoting greater adoption of insurance significantly increases farmers' sow production, and this effect seems to persist in the longer run; moreover, the increase in sow production in response to the sow insurance does not seem to be the result of the substitution of other livestock.