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Too Certain to Invest? Public Safety Nets and Insurance Markets in Ethiopia

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  • Duru, Maya Joan
Abstract
Researchers’ efforts to introduce index insurance in developing countries have met with little demand despite its great potential to help farmers mitigate economic risk. I argue that researchers have overlooked institutional context’s critical role in the formation of private markets when designing insurance contracts. Using micro-level evidence from Ethiopia, I show that recipients of a preexisting effective, large-scale public safety net fail to take-up a new highly subsidized private insurance offer. Government safety net programs can decrease demand for private index insurance, forming an additional barrier to index insurance take-up. A direct implication of this research is that policymakers should design private and public insurance products that account for, or even complement, each other.

Suggested Citation

  • Duru, Maya Joan, 2016. "Too Certain to Invest? Public Safety Nets and Insurance Markets in Ethiopia," World Development, Elsevier, vol. 78(C), pages 37-51.
    • Handle: RePEc:eee:wdevel:v:78:y:2016:i:c:p:37-51
    DOI: 10.1016/j.worlddev.2015.10.034
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    References listed on IDEAS

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    2. Shukri Ahmed & Craig McIntosh & Alexandros Sarris, 2020. "The Impact of Commercial Rainfall Index Insurance: Experimental Evidence from Ethiopia," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(4), pages 1154-1176, August.
    3. Shukkri AHMED & Craig MCINTOSH & Alexandros SARRIS, 2017. "The Impact of Commercial Rainfall Index Insurance: Experimental Evidence from Ethiopia," Working Papers 4289, FERDI.
    4. Wong, Ho Lun & Wei, Xiangdong & Kahsay, Haftom Bayray & Gebreegziabher, Zenebe & Gardebroek, Cornelis & Osgood, Daniel E. & Diro, Rahel, 2020. "Effects of input vouchers and rainfall insurance on agricultural production and household welfare: Experimental evidence from northern Ethiopia," World Development, Elsevier, vol. 135(C).
    5. Shukkri AHMED & Craig MCINTOSH & Alexandros SARRIS, 2017. "The Impact of Commercial Rainfall Index Insurance: Experimental Evidence from Ethiopia," Working Papers 4288, FERDI.
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