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Regional inequality in China's health care expenditures

  • Win Lin Chou
  • Zijun Wang
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    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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    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
    Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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    1. Zhang, Xiaobo & Kanbur, Ravi, 2005. "Spatial inequality in education and health care in China," China Economic Review, Elsevier, vol. 16(2), pages 189-204.
    2. 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, vol. 70(5), pages 665-704, October.
    3. Theo Hitiris & John Nixon, 2001. "Convergence of health care expenditure in the EU countries," Applied Economics Letters, Taylor & Francis Journals, vol. 8(4), pages 223-228.
    4. Westerlund, Joakim & Edgerton, David L., 2007. "A panel bootstrap cointegration test," Economics Letters, Elsevier, vol. 97(3), pages 185-190, December.
    5. Liu, Yuanli & Hsiao, William C. & Eggleston, Karen, 1999. "Equity in health and health care: the Chinese experience," Social Science & Medicine, Elsevier, vol. 49(10), pages 1349-1356, November.
    6. Bart Hobijn & Philip Hans Franses, 2000. "Asymptotically perfect and relative convergence of productivity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(1), pages 59-81.
    7. Gerdtham, Ulf-G. & Jonsson, Bengt, 2000. "International comparisons of health expenditure: Theory, data and econometric analysis," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 1, pages 11-53 Elsevier.
    8. Chou, Win Lin, 2007. "Explaining China's regional health expenditures using LM-type unit root tests," Journal of Health Economics, Elsevier, vol. 26(4), pages 682-698, July.
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