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Insurance and Inclusive GrowthWhile the real sector and governments (along with a few micro economists) have long recognized the core economic role that the insurance function plays, the mainstream economics profession has largely treated it as invisible background. This literature review of the relevant research, most of which has been carried out in the past few decades, demonstrates that the insurance sector contributes at a basic level to inclusive economic growth and the effectiveness of the credit function. It also shows that the latter impact may be particularly fundamental in assisting the poor to avoid poverty traps and to progress economically. However, the research and the theoretical models underpinning it also highlight certain constraints to the efficient utilization of the insurance function. The literature dealing with innovations designed to overcome these constraints is reviewed and successful initiatives and remaining challenges are identified.
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Policies on Managing Risk in Agricultural MarketsOver the past dozen years, policymakers
 have largely abandoned long-standing popular approaches for
 addressing risk in agriculture without fully resolving the
 question of how best to manage the negative consequences of
 volatile agricultural markets. The article reviews the
 transition from past policies and describes current
 approaches that distinguish between the trade-related fiscal
 consequences of commodity market volatility and the
 consequences of price and production risks for vulnerable
 rural households and communities. Current policies rely more
 heavily on markets, even though markets for risk are
 incomplete in numerous ways. The benefits and limitations of
 market-based instruments are examined in the context of risk
 management strategies, and innovative approaches to extend
 the reach of risk markets are discussed.
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The Impact of Remittances on Rural Poverty and Inequality in ChinaLarge numbers of agricultural labor
 moved from the countryside to cities after the economic
 reforms in China. Migration and remittances play an
 important role in transforming the structure of rural
 household income. This paper examines the impact of
 rural-to-urban migration on rural poverty and inequality in
 the case of Hubei province using the data of a 2002
 household survey. Since remittances are a potential
 substitute for farm income, the paper presents
 counterfactual scenarios of what rural income, poverty, and
 inequality would have been in the absence of migration. The
 results show that, by providing alternatives to households
 with lower marginal labor productivity in agriculture,
 migration leads to an increase in rural income. In contrast
 to many studies that suggest the increasing share of
 non-farm income in total income widens inequality, this
 paper offers support for the hypothesis that migration tends
 to have egalitarian effects on rural income for three
 reasons: (i) migration is rational self-selection - farmers
 with higher agricultural productivities choose to remain in
 local agricultural production while those with higher
 expected return in urban non-farm sectors migrate; (ii)
 poorer households facing binding constraints of land
 shortage are more likely to migrate; and (iii) the poorest
 poor benefit disproportionately from remittances.