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Will Urban Migrants Formally Insure their Rural Relatives? Family Networks and Rainfall Index Insurance in Burkina Faso

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Listed:
  • Harounan Kazianga

    (Oklahoma State University)

  • Zaki Wahhaj

    (University of Kent)

Abstract

We present findings from a pilot study exploring whether and how existing ties between urban migrants and rural farmers may be used to provide the latter improved access to formal insurance. Urban migrants in Ouagadougou (the capital of Burkina Faso) originating from nearby villages were offered, at the prevailing market price, a rainfall index insurance product that can potentially protect their rural relatives from adverse weather shocks. The product had an uptake of 22% during the two-week subscription window. Uptake rates were higher by 17-22 ppts among urban migrants who were randomly offered an insurance policy that would make pay-outs directly to the intended beneficiary rather than the subscriber. We argue that rainfall index insurance can complement informal risk-sharing networks by mitigating problems of informational asymmetry and self-control issues.

Suggested Citation

  • Harounan Kazianga & Zaki Wahhaj, 2018. "Will Urban Migrants Formally Insure their Rural Relatives? Family Networks and Rainfall Index Insurance in Burkina Faso," Economics Working Paper Series 1802, Oklahoma State University, Department of Economics and Legal Studies in Business.
    • Handle: RePEc:okl:wpaper:1802
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    File URL: https://business.okstate.edu/site-files/docs/ecls-working-papers/OKSWPS1802.pdf
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    More about this item

    Keywords

    Microinsurance markets; Indexed insurance; Rainfall; Migration; Informal insurance networks;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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