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Insurance payouts reduced agricultural labor participation by 28.5 percentage points at median rainfall shocks and reduced total days worked by 15.44 days during the season, whereas non-payout insurance offers had zero significant effect (-4.6 days, p > 0.10).
In villages experiencing delayed monsoon payouts, receiving an insurance payout lowered labor force participation by 28.5 percentage points (t-stat = -1.635) and reduced harvest labor supply by 15.44 days (t-stat = -1.391) at median rainfall deficiency.
The net present value income effect accounts for only Rs 10,000 (roughly 42%) of the observed Rs 23,600 long-run capital stock differential between grace period and regular clients, proving that enabling illiquid investment choice (the portfolio effect) drives the majority of economic gains.