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Heterogeneity of the Effects of Health Insurance on Household Savings: Evidence from Rural China

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  • Cheung, Diana
  • Padieu, Ysaline

Abstract

We estimate the impact of the New Cooperative Medical Scheme (NCMS) on household savings by income quartiles in rural China. We control for endogenous NCMS participation with an instrumental variable strategy using the China Health and Nutrition survey. We find that NCMS has a negative impact on middle-income savings but does not affect the poorest participants. NCMS also decreases richest participants’ savings, when they do not benefit from other health programs. Thus, the implementation of a health care scheme appears to be an appropriate tool to lower savings and boost consumption and so sustain economic growth.

Suggested Citation

  • Cheung, Diana & Padieu, Ysaline, 2015. "Heterogeneity of the Effects of Health Insurance on Household Savings: Evidence from Rural China," World Development, Elsevier, vol. 66(C), pages 84-103.
  • Handle: RePEc:eee:wdevel:v:66:y:2015:i:c:p:84-103
    DOI: 10.1016/j.worlddev.2014.08.004
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Diana Cheung & Jean-Pierre Laffargue & Ysaline Padieu, 2016. "Insurance of Household Risks and the Rebalancing of the Chinese Economy: Health Insurance, Health Expenses and Household Savings," Pacific Economic Review, Wiley Blackwell, vol. 21(3), pages 381-412, August.
    2. repec:eee:chieco:v:49:y:2018:i:c:p:197-209 is not listed on IDEAS
    3. Baozhong Su & Gatwaza Hategekimana Thierry & Qihui Chen & Qiran Zhao, 2017. "The New Cooperative Medical Scheme and Self-Employment in Rural China," Sustainability, MDPI, Open Access Journal, vol. 9(2), pages 1-10, February.

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