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 We use a survey of farmers in Inner Mongolia, China, with difference-in-difference, propensity score matching, and hybrid propensity score matching difference-in-difference 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, we speculate that a number of specific changes to the crop insurance program might increase its positive impacts. Originality/value We 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.