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Health Insurance Coverage for Low-income Households: Consumption Smoothing and Investment

Author

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  • Liu, Kai

    () (Dept. of Economics, Norwegian School of Economics and Business Administration)

Abstract

I estimate the effects of public health insurance on consumption smoothing and investigate the extent to which the public insurance interacts with private arrangements of self-insurance. Exploiting a dramatic expansion in health insurance coverage in rural China, I find that the introduction of public health insurance helps households completely insure against severe health shocks. The health insurance also reduces the magnitude of decline during a health shock in investments in children's education, agricultural activities and durable goods. The evidence suggests that the benefit of social insurance for low-income households could also come from reducing the use of costly smoothing mechanisms.

Suggested Citation

  • Liu, Kai, 2013. "Health Insurance Coverage for Low-income Households: Consumption Smoothing and Investment," Discussion Paper Series in Economics 16/2013, Norwegian School of Economics, Department of Economics.
  • Handle: RePEc:hhs:nhheco:2013_016
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    References listed on IDEAS

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    More about this item

    Keywords

    Public health insurance; Rural China;

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • I10 - Health, Education, and Welfare - - Health - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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