Date of Graduation

Spring 5-16-2025

Document Type

Thesis

Degree Name

Master of Science in Applied Economics (MSAE)

College/School

College of Arts and Sciences

Department/Program

Applied Economics

First Advisor

Andrew Hobbs

Abstract

Income volatility resulting from crop loss presents a significant threat to rural livelihoods in India, where nearly half of the workforce is employed in agriculture. This study examines the causal impact of crop insurance uptake on farm income using nationally representative data from the 70th and 77th rounds of the National Sample Survey, merged with satellite-derived climate data and Harmful Degree Days (HDD), which is used as a proxy for crop-damaging temperature. To address selection bias in insurance enrollment, Propensity Score Matching, Inverse Propensity Weighting, and a Two-Way Fixed Effects model are used. Results show that insurance uptake is associated with a statistically significant increase in agricultural income, ranging from 29% to 40% across the different methods. Additionally, the relationship between HDD and insurance uptake is found to be nonlinear and positive, that is moderate exposure to high temperature discourages enrollment, whereas severe exposure increases it. By integrating causal inference methods with climate data across all Indian states, this study provides new empirical evidence on the effectiveness of crop insurance and the determinants of its adoption.

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