How Does Agricultural Insurance Optimize Labor Allocation? Empirical Evidence from Vegetable Farmers in ShouGuang

Climate risks and rural labor outflow are jointly challenging the sustainability of farm households in disaster-prone agricultural regions. Agricultural insurance, as an important risk management tool, may influence not only farm income but also farmers’ production and labor decisions. While previous studies on agricultural insurance have primarily focused on staple crops and income stabilization, the effects of labor allocation in facility-based intensive agriculture remain underexplored. This study addresses this gap by examining how participation in agricultural insurance affects farm household labor allocation in the context of greenhouse vegetable production. Using survey data collected from July to August 2025 from 247 greenhouse vegetable farmers in ShouGuang, China’s largest vegetable production base, we employ Probit and Two-Stage Least Squares (2SLS) models to address endogeneity and mediation analysis to explore the underlying mechanisms. The findings show that: (1) Agricultural insurance participation significantly increases the probability of farm households increasing agricultural labor input in the next planting season. (2) Agricultural insurance reduces farmers’ likelihood of exiting agricultural production through increased investment in agricultural technology, but this effect is constrained by the availability of investment capital. (3) The impact of agricultural insurance on labor allocation varies across different farmer groups, and is more pronounced among middle-aged and younger farmers with relatively small farm sizes, lower disaster risk, and higher levels of education. Several insurance-related policy recommendations are proposed to stabilize the agricultural labor force and mitigate rural labor decline—key dimensions of sustainable rural development. Given the single-region focus and sample size, the generalizability of these findings requires further validation in other agricultural contexts.