Abstract
AbstractOver the last two decades, the US federal crop insurance programme expanded rapidly. Despite growing importance of crop insurance programmes, little is known about the relationship between crop insurance and disinvestment and exit decisions of farms. Using a farm-level panel dataset, we parametrically and semi-parametrically estimate the effects of crop insurance on farm disinvestment and farm exits with carefully developed identification strategies. Our estimation results indicate that (i) crop insurance reduces the likelihood of farm exits and (ii) lowers the magnitude of farm disinvestment. The positive and significant effects of crop insurance on farm survival and disinvestment remain robust across different specifications.
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