Research Center for Rural Economy, Ministry of Agriculture and Rural Affairs
In this paper, the impact of agricultural insurance exclusion on farmers' income was systematically investigated. The micro-level data in this paper were generated from a survey about agricultural insurance in 12 counties of 6 northern provinces in 2015. To begin with, Based on OLS and Oaxaca-Blinder strategy, we get conclusion that agricultural insurance exclusion has a significant negative impact on farmers' income, and the difference in agricultural income between excluded farmers and non-excluded farmers is 6%. Furthermore, the Propensity Score Matching method is adopted to correct the possible sample selectivity bias. The main above conclusion is still robust. We adopted sub-sample studies to deal with heterogeneity. The empirical result shows that the increase of agricultural income for young farms and expanded non-excluded farmers is obvious. In addition, compared with the farmers with higher risk of disaster, low affected farmers who are not excluded have a low probability of being affected and getting compensation. So agricultural premiums become additional agricultural costs and reduce their income. Therefore, policy implications have been generated.The government need to promote policy-based agricultural insurance by increasing compensation level, expanding scope and designing more insurance plan. By reducing the exclusion, agricultural insurance would play more significant rolde in promoting income of farmers.