The Impact of Agricultural Insurance on Urban-Rural Consumption Gap

Abstract

Based on panel data from 30 provinces in China from 2005 to 2020, this paper analyzes the impact and mechanism of the level of agricultural insurance (AI) coverage on the urban-rural consumption gap (URCG). The study finds: (1) Long-term development of AI can promote the narrowing of URCG. (2) Regional heterogeneity tests reveal that the impact of AI on URCG is particularly significant in eastern regions but weak in central and western regions. (3) From the perspective of intermediary effects, accelerating urbanization (UR) is an important mechanism for AI to narrow URCG and enhance economic quality and efficiency. (4) Based on the threshold effect of fiscal support for agriculture on the level of AI and URCG, it is found that when fiscal support for agriculture is moderate, the development of AI is conducive to narrowing URCG. However, during periods of excessive fiscal support for agriculture, the role of AI in narrowing URCG is not significant. If fiscal support for agriculture continues to increase, the development of AI may even widen the consumption gap between urban and rural areas.