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Subsidized Crop Insurance and Technological Change in U.S. Crop Production

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Title: Subsidized Crop Insurance and Technological Change in U.S. Crop Production
Author: Chemeris, Anna
Department: Department of Food, Agricultural and Resource Economics
Program: Food, Agriculture and Resource Economics
Advisor: Ker, Alan
Abstract: Innovation in the agricultural sector will determine our ability to consistently sustain high yields and feed nine billion people by 2050. Most of the world's agricultural crop production is produced under heavily subsidized crop insurance, so understanding the impact that subsidized insurance has on technological change is important. In the United States, insurance premium subsidies increased from 30 percent to 60 percent between 1994 and 2000. In this thesis, I compare the rates of technological change in the lower and upper tails of crop yield distributions before and after the subsidy change by modelling corn, soybean, and winter wheat yields as a mixture of two normal distributions. My results indicate that higher subsidies increase the rates of technological change in both tails of the yield distribution, with the increase being greater in the lower tail. These results can be used to inform the design of business risk management programs.
Date: 2019-05
Rights: Attribution-NonCommercial-NoDerivatives 4.0 International
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Attribution-NonCommercial-NoDerivatives 4.0 International Except where otherwise noted, this item's license is described as Attribution-NonCommercial-NoDerivatives 4.0 International