Investigating the Effect of Insurance on the Total Productivity of Agricultural production Factors: Analysis Based on Index Number Approach

Abstract

According to the new economic theories and endogenous growth models, productivity factors of production are expressed as a key variable for achieving high and continuous growth. Therefore, identifying the factors affecting the productivity of production factors is very important. In this study, due to the significance of the agricultural sector in the Iranian economy and its role in supplying food needs, we specified a behavioral model for productivity factors of agricultural production by focusing on the impact of insurance variable as an indicator for risk management. For this purpose, the total productivity factors of production was estimated using Tornqvist-Theil Index and the theoretical model of behavioral regression was evaluated by using cointegration methodology and based on time series data during 1984- 2017. The results show that insurance can positively influence productivity by providing security in crop production and increasing computing power and farmer planning. In addition, the real exchange rate, training costs, and technical efficiency indicators had a positive effect, while cost of capital had a negative effect on productivity. The information provided in this study can be used to implement insurance protection policies in the agricultural sector effectively to increase productivity.