Permanent land-use rights and endowment insurance: Chinese evidence of the substitution effect
This paper studies the substitution effect of permanent land-use rights on endowment insurance in China. We first explain the rationality using an overlapping-generations model with heterogeneous households possessing land-use rights or not, and find that economic agents profiting from land in the latter stage of their life tend to save less for retirement than their land-deprived counterparts. Empirical evidence from village-clustered Chinese survey data on rural households supports this finding, locating a significant negative effect of land on social and commercial endowment insurance purchase. Apart from the important policy implication of compensating land-deprived farmers with insurance, our theoretical and empirical models both yield unexpected informing findings.
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