Author(s)

Bing Wang, Congmin Liu

Corresponding Author

Bing Wang

Abstract

This paper explores the impact of full-cost insurance, a policy aimed at reducing farmers' income risk and ensuring food security, on rural consumption. Using agricultural economic data from 13 major grain-producing provinces in China, spanning 2011 to 2022, we investigate how the implementation of full-cost insurance—modeled as a quasi-natural experiment—affects rural residents' consumption patterns. The findings reveal a significant positive effect, primarily driven by increased grain production. Additionally, heterogeneity analysis suggests that the effectiveness of the full-cost insurance scheme is contingent on farmers' expectations of the policy. These results provide empirical insights into the role of full-cost insurance in rural economies and offer policy implications for refining its institutional design.

Keywords

Full-cost insurance; DID; Consumption