National Institutions and Self-Insurance

We here study the relationship between national institutions and farming practices in Africa. The analysis exploits detailed geospatial data to compare outcomes across nearby plots exposed to the same underlying agroclimatic risk but belonging to adjacent countries that have different national institutions. We document systematic cross-border differences in rural economic activity. In countries that have worse national institutions, farmers grew lower-risk crops, diversified land by planting a greater variety of crops, devoted more total land to agriculture, and were more likely to hold livestock. These patterns are consistent with a setting in which differences in property rights affect how farmers respond to agroclimatic risk.