@article{44811961e4da4883b1598cf83be55fcf,
title = "Can insurance alter poverty dynamics and reduce the cost of social protection in developing countries?",
abstract = "This paper develops a dynamic theoretical model to assess the impact of asset insurance on poverty and the cost of social protection in developing countries. We analyze the model under two technological assumptions: a standard, globally concave production technology, and a fixed cost technology that creates a non-convex production set and admits the possibility of multiple equilibria and a poverty trap. Under both assumptions, the introduction of an asset insurance market reduces poverty and the costs of social protection. Under the non-convex production set, there is a strong public finance case for insurance premium subsidies that target poor and vulnerable households and bring them into the insurance market. While the challenges of making microinsurance markets work are multiple, this analysis suggests the potential gains to solving these challenges are substantial.",
keywords = "chronic poverty, dynamic stochastic programming, insurance, poverty traps, risk, vulnerability",
author = "Janzen, {Sarah A.} and Carter, {Michael R.} and Munenobu Ikegami",
note = "Funding Information: We thank the BASIS Assets and Market Access Innovation Lab through the United States Agency for International Development (USAID) grant number EDH‐A‐00‐06‐0003‐00 and UKaid (Department for International Development) for financial support. We also thank seminar participants at the NEUDC Conference, the Annual Meeting of the American Agricultural Economics Association, the Pacific Development Conference, the Midwest International Economic Development Conference, and the 7th International Microinsurance Conference. We especially thank Alain de Janvry, Andrew Hobbes and Jim Wilen for their especially helpful comments. Code used for this paper is available from the authors upon request. All errors are our own. Funding Information: We thank the BASIS Assets and Market Access Innovation Lab through the United States Agency for International Development (USAID) grant number EDH-A-00-06-0003-00 and UKaid (Department for International Development) for financial support. We also thank seminar participants at the NEUDC Conference, the Annual Meeting of the American Agricultural Economics Association, the Pacific Development Conference, the Midwest International Economic Development Conference, and the 7th International Microinsurance Conference. We especially thank Alain de Janvry, Andrew Hobbes and Jim Wilen for their especially helpful comments. Code used for this paper is available from the authors upon request. All errors are our own. Publisher Copyright: {\textcopyright} 2020 American Risk and Insurance Association",
year = "2021",
month = jun,
doi = "10.1111/jori.12322",
language = "English (US)",
volume = "88",
pages = "293--324",
journal = "Journal of Risk and Insurance",
issn = "0022-4367",
publisher = "Wiley-Blackwell",
number = "2",
}