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Regional inequality in China's health care expenditures

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  • Win Lin Chou
  • Zijun Wang
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    Abstract

    This paper has two parts. The first part examines the regional health expenditure inequality in China by testing two hypotheses on health expenditure convergence. Cross-section regressions and cluster analysis are used to study the health expenditure convergence and to identify convergence clusters. We find no single nationwide convergence, only convergence by cluster. In the second part of the paper, we investigate the long‐run relationship between health expenditure inequality, income inequality, and provincial government budget deficits (BD) by using new panel cointegration tests with health expenditure data in China's urban and rural areas. We find that the income inequality and real provincial government BD are useful in explaining the disparity in health expenditure prevailing between urban and rural areas. In order to reduce health‐spending inequality, one long‐run policy suggestion from our findings is for the government to implement more rapid economic development and stronger financing schemes in poorer rural areas. Copyright (C) 2009 John Wiley & Sons, Ltd.

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    File URL: http://hdl.handle.net/10.1002/hec.1511
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    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

    Volume (Year): 18 (2009)
    Issue (Month): S2 (July)
    Pages: S137-S146

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    Handle: RePEc:wly:hlthec:v:18:y:2009:i:s2:p:s137-s146

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    Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

    Related research

    Keywords: health expenditure inequality ; income inequality ; government budget deficits ; convergence test ; panel cointegration test ;

    References

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    1. Xiaobo Zhang & Ravi Kanbur, 2004. "Spatial Inequality in Education and Health Care in China," Working Papers, Institute for Social and Economic Change, Bangalore 159, Institute for Social and Economic Change, Bangalore.
    2. Chou, Win Lin, 2007. "Explaining China's regional health expenditures using LM-type unit root tests," Journal of Health Economics, Elsevier, Elsevier, vol. 26(4), pages 682-698, July.
    3. Westerlund, Joakim & Edgerton, David L., 2007. "A panel bootstrap cointegration test," Economics Letters, Elsevier, Elsevier, vol. 97(3), pages 185-190, December.
    4. Theo Hitiris & John Nixon, 2001. "Convergence of health care expenditure in the EU countries," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 8(4), pages 223-228.
    5. Bart Hobijn & Philip Hans Franses, 2000. "Asymptotically perfect and relative convergence of productivity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 15(1), pages 59-81.
    6. Liu, Yuanli & Hsiao, William C. & Eggleston, Karen, 1999. "Equity in health and health care: the Chinese experience," Social Science & Medicine, Elsevier, Elsevier, vol. 49(10), pages 1349-1356, November.
    7. Joakim Westerlund & David L. Edgerton, 2008. "A Simple Test for Cointegration in Dependent Panels with Structural Breaks," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 70(5), pages 665-704, October.
    8. Gerdtham, Ulf-G. & Jonsson, Bengt, 2000. "International comparisons of health expenditure: Theory, data and econometric analysis," Handbook of Health Economics, Elsevier, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 1, pages 11-53 Elsevier.
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    Cited by:
    1. Halvor Mehlum & Ragnar Torvik & Simone Valente, 2013. "China’s Savings Multiplier," Working Papers, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School 0013, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
    2. Masayoshi Hayashi, 2011. "The Effects of Medical Factors on Transfer Deficits in Public Assistance in Japan: A Quantile Regression Analysis," CIRJE F-Series, CIRJE, Faculty of Economics, University of Tokyo CIRJE-F-816, CIRJE, Faculty of Economics, University of Tokyo.
    3. Chen, Yuyu & Jin, Ginger Zhe, 2012. "Does health insurance coverage lead to better health and educational outcomes? Evidence from rural China," Journal of Health Economics, Elsevier, Elsevier, vol. 31(1), pages 1-14.
    4. Wen-Yi Chen, 2013. "Does healthcare financing converge? Evidence from eight OECD countries," International Journal of Health Care Finance and Economics, Springer, Springer, vol. 13(3), pages 279-300, December.
    5. Winnie Yip & Adam Wagstaff & William C. Hsiao, 2009. "Economic analysis of China's health care system: turning a new page," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 18(S2), pages S3-S6, July.
    6. Bonatti, Luigi & Fracasso, Andrea, 2014. "Modeling the Transition Towards Renminbi's Full Convertibility: Implications for China’s Growth," MPRA Paper 54129, University Library of Munich, Germany.
    7. JunQiang Liu & Tao Chen, 2013. "Sleeping money: investigating the huge surpluses of social health insurance in China," International Journal of Health Care Finance and Economics, Springer, Springer, vol. 13(3), pages 319-331, December.

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