An empirical analysis of the effect of crop insurance on farmers' income Results from inner Mongolia in China

Purpose - The purpose of this paper is to assess the effect of crop insurance on farmer income in Inner Mongolia, China. Design/methodology/approach - The authors use a survey of farmers in Inner Mongolia, China, with difference-in-difference (DID), propensity score matching (PSM), and hybrid PSM DID treatment effect estimators to assess the effectiveness of crop insurance on farmer income. Findings - The empirical results show that crop insurance does not significantly affect farmer income under the current policy of "low-premium, wide-coverage, low-guarantee and low-indemnity." Research limitations/implications - A possible limitation of this study is that the data includes only one geographic area, Inner Mongolia, China, and so results may not generalize to other regions of China. Practical implications - This research provides empirical estimates of the impact of crop insurance on farm household income. Given the results, the authors speculate that a number of specific changes to the crop insurance program might increase its positive impacts. Originality/value - The authors believe this is the first study to use individual farm household level survey data to evaluate the impact of crop insurance on farmer income in China.