Local Elections and Consumption Insurance : Evidence from Chinese Villages

While the literature on consumption insurance is growing fast, little research has been conducted on how rural consumption insurance is affected by democracy. In this paper the authors examine how consumption insurance of Chinese rural residents is...

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Bibliographic Details
Main Authors:	Gan, Li, Xu, Lixin Colin, Yao, Yang
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ADMINISTRATIVE COSTS AGRICULTURE ANNUAL GROWTH ANNUAL GROWTH RATE AVERAGE ANNUAL AVERAGE INCOME BUDGET CONSTRAINT CONSUMPTION GROWTH CONSUMPTION INSURANCE CONSUMPTION LEVELS CONSUMPTION SMOOTHING CREDIT MARKET CROSS SECTION UNIT DATA SET DECENTRALIZATION DEMAND FOR CONSUMPTION DETERMINANTS OF CONSUMPTION DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS ECONOMETRICS ECONOMIC ANALYSIS ECONOMIC DEVELOPMENT ECONOMIC EFFECTS ECONOMIC OUTCOMES ECONOMIC PERSPECTIVES ECONOMIC REVIEW EMPIRICAL ISSUE EMPIRICAL RESULTS EXPLANATORY POWER EXPLANATORY VARIABLE FARMERS FUNCTIONAL FORM FUTURE RESEARCH GDP GDP PER CAPITA GOVERNMENT REGULATIONS GROWTH EQUATION HOUSEHOLD CHARACTERISTICS HOUSEHOLD CONSUMPTION HOUSEHOLD CONTROLS HOUSEHOLD DATA HOUSEHOLD HEAD HOUSEHOLD HEADS HOUSEHOLD INCOME HOUSEHOLD MEMBERS HOUSEHOLD SIZE HOUSEHOLD SIZES IDIOSYNCRATIC SHOCKS IMPLICATIONS FOR CONSUMPTION INCOME INCOME GROUPS INCOME GROWTH INCOME LEVEL INCOME SHOCKS INCOME SMOOTHING INCOMES INFORMAL INSURANCE LEVELS OF CONSUMPTION MEASUREMENT ERRORS MEDIAN VOTER MEDIAN VOTER THEOREM MEDIAN VOTERS MIDDLE CLASS NEGATIVE EXTERNALITY 0 HYPOTHESIS OPTIMIZATION POLICY IMPLICATIONS POLICY RESEARCH POLITICAL ECONOMY POOR POOR FARMERS POSITIVE EFFECT POVERTY REDUCTION PUBLIC CHOICE PUBLIC ECONOMICS PUBLIC EXPENDITURE PUBLIC EXPENDITURES PUBLIC GOODS REDUCING POVERTY REDUCTION IN CONSUMPTION RISK AVERSION RISK SHARING RURAL RURAL AREAS RURAL CREDIT RURAL ECONOMY RURAL HOUSEHOLD RURAL HOUSEHOLDS RURAL RESIDENTS SAVINGS SIGNIFICANCE LEVEL TAXATION TOTAL INCOME UTILITY FUNCTION VILLAGE LEADERS WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2007/04/7537736/local-elections-consumption-insurance-evidence-chinese-villages http://hdl.handle.net/10986/7064

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Summary:	While the literature on consumption insurance is growing fast, little research has been conducted on how rural consumption insurance is affected by democracy. In this paper the authors examine how consumption insurance of Chinese rural residents is affected if the local leader is democratically elected. Exploring a unique panel data set of 1,400 households from 1987 to 2002, they find that consumption insurance is more complete when the households are in villages with elected village leaders. Furthermore, democracy improves consumption insurance only for the poor and middle-income farmers, but not for the rich. These findings underline the importance of democratic governance for ensuring better rural consumption insurance and poverty reduction.

Local Elections and Consumption Insurance : Evidence from Chinese Villages

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