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Effects of National Health Insurance on precautionary saving: new evidence from Taiwan

  • Chung-Ming Kuan

    ()

  • Chien-Liang Chen

In this article, we evaluate the crowd-out effects of the National Health Insurance (NHI) on household precautionary saving in Taiwan. Our analysis differs from existing studies in two respects. First, we do not exclude the households with negative saving that are about 18.9% of the entire sample. Second, we conduct a more complete treatment effect analysis. We estimate both average treatment effect (ATE) and quantile treatment effect (QTE) using the difference-in-differences method. We also partition some covariates (household income and the age of household head) into different groups and estimate the group-wise ATEs and QTEs. While supporting the existing finding that the NHI has negative impact on households saving, our empirical result shows that the QTEs are heterogeneous across saving quantiles, such that higher savers tend to have greater reduction in saving after the NHI is enforced. It is also found that the NHI has greater impact on the households with higher income and those with retiring heads, especially on high savers in these groups. Copyright Springer-Verlag 2013

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File URL: http://hdl.handle.net/10.1007/s00181-011-0533-5
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Article provided by Springer in its journal Empirical Economics.

Volume (Year): 44 (2013)
Issue (Month): 2 (April)
Pages: 921-943

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Handle: RePEc:spr:empeco:v:44:y:2013:i:2:p:921-943
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  1. Kotlikoff, Laurence J, 1979. "Testing the Theory of Social Security and Life Cycle Accumulation," American Economic Review, American Economic Association, vol. 69(3), pages 396-410, June.
  2. Hubbard, R Glenn & Skinner, Jonathan & Zeldes, Stephen P, 1995. "Precautionary Saving and Social Insurance," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 360-99, April.
  3. Finkelstein, Amy, 2002. "The effect of tax subsidies to employer-provided supplementary health insurance: evidence from Canada," Journal of Public Economics, Elsevier, vol. 84(3), pages 305-339, June.
  4. Diamond, P. A. & Hausman, J. A., 1984. "Individual retirement and savings behavior," Journal of Public Economics, Elsevier, vol. 23(1-2), pages 81-114.
  5. Chou, Shin-Yi & Liu, Jin-Tan & Hammitt, James K., 2003. "National Health Insurance and precautionary saving: evidence from Taiwan," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 1873-1894, September.
  6. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
  7. repec:cup:cbooks:9780521845731 is not listed on IDEAS
  8. Alessandra Guariglia & Mariacristina Rossi, 2003. "Private Medical Insurance and Saving: Evidence from the British Household Panel Survey," CEIS Research Paper 39, Tor Vergata University, CEIS.
  9. Palumbo, Michael G, 1999. "Uncertain Medical Expenses and Precautionary Saving Near the End of the Life Cycle," Review of Economic Studies, Wiley Blackwell, vol. 66(2), pages 395-421, April.
  10. Daniel Feenberg & Jonathan Skinner, 1992. "The Risk and Duration of Catastrophic Health Care Expenditures," NBER Working Papers 4147, National Bureau of Economic Research, Inc.
  11. Mark Kazarosian, 1993. "Precautionary Savings- A Panel Study," Boston College Working Papers in Economics 247, Boston College Department of Economics.
  12. Alex Maynard & Jiaping Qiu, 2009. "Public insurance and private savings: who is affected and by how much?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(2), pages 282-308, 03.
  13. repec:cup:cbooks:9780521608275 is not listed on IDEAS
  14. Shin-Yi Chou & Jin-Tan Liu & Cliff J. Huang, 2004. "Health insurance and savings over the life cycle-a semiparametric smooth coefficient estimation," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(3), pages 295-322.
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