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Stochastic Transfers, Risky Investment and Incomes: Evidence from an Income Guarantee Program in Thailand

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  • Wagener, Andreas
  • Zenker, Juliane

Abstract

From 2009 to 2011, the Thai government implemented an income guarantee program for rice, tapioca and maize farmers. Essentially, this program added a non-negative but stochastic component to the incomes of registered farmers. We evaluate the impact of the program on risk attitudes and investment behavior of small-scale rice farmers in relatively poor North-eastern Thailand. To control for self-selection into the scheme, we use propensity score matching. We find that that participation in the program significantly makes farmers less risk-averse, induces higher investments and boosts incomes. Medium-term effects are stronger than short-term effects.

Suggested Citation

  • Wagener, Andreas & Zenker, Juliane, 2015. "Stochastic Transfers, Risky Investment and Incomes: Evidence from an Income Guarantee Program in Thailand," Hannover Economic Papers (HEP) dp-562, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  • Handle: RePEc:han:dpaper:dp-562
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    References listed on IDEAS

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    1. Dean Karlan & Robert Osei & Isaac Osei-Akoto & Christopher Udry, 2014. "Agricultural Decisions after Relaxing Credit and Risk Constraints," The Quarterly Journal of Economics, Oxford University Press, vol. 129(2), pages 597-652.
    2. Hongbin Cai & Yuyu Chen & Hanming Fang & Li-An Zhou, 2009. "Microinsurance, Trust and Economic Development: Evidence from a Randomized Natural Field Experiment," NBER Working Papers 15396, National Bureau of Economic Research, Inc.
    3. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    4. Shawn Cole & Xavier Giné & James Vickery, 2017. "How Does Risk Management Influence Production Decisions? Evidence from a Field Experiment," Review of Financial Studies, Society for Financial Studies, vol. 30(6), pages 1935-1970.
    5. David A. Hennessy, 1998. "The Production Effects of Agricultural Income Support Policies under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 46-57.
    6. Ruth Hill & Angelino Viceisza, 2012. "A field experiment on the impact of weather shocks and insurance on risky investment," Experimental Economics, Springer;Economic Science Association, vol. 15(2), pages 341-371, June.
    7. Imbens,Guido W. & Rubin,Donald B., 2015. "Causal Inference for Statistics, Social, and Biomedical Sciences," Cambridge Books, Cambridge University Press, number 9780521885881, September.
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    More about this item

    Keywords

    Income support; farm households; risk attitude; investment; Thailand;

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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