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

  • Liu, Kai

    ()

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

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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.

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File URL: http://www.nhh.no/Files/Filer/institutter/sam/Discussion%20papers/2013/16.pdf
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Paper provided by Department of Economics, Norwegian School of Economics in its series Discussion Paper Series in Economics with number 16/2013.

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Length: 32 pages
Date of creation: 24 Oct 2013
Date of revision:
Handle: RePEc:hhs:nhheco:2013_016
Contact details of provider: Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway
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Fax: 5595 9100
Web page: http://www.nhh.no/sam/
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  1. Emily Hannum, 2005. "Market transition, educational disparities, and family strategies in rural china: New evidence on gender stratification and development," Demography, Springer, vol. 42(2), pages 275-299, May.
  2. Chetty, Raj & Looney, Adam, 2006. "Consumption smoothing and the welfare consequences of social insurance in developing economies," Journal of Public Economics, Elsevier, vol. 90(12), pages 2351-2356, December.
  3. Xiaohua Yu & David Abler, 2009. "The Demand for Food Quality in Rural China," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 57-69.
  4. Amy Finkelstein & Sarah Taubman & Bill Wright & Mira Bernstein & Jonathan Gruber & Joseph P. Newhouse & Heidi Allen & Katherine Baicker & The Oregon Health Study Group, 2011. "The Oregon Health Insurance Experiment: Evidence from the First Year," NBER Working Papers 17190, National Bureau of Economic Research, Inc.
  5. Wagstaff, Adam & Lindelow, Magnus & Gao Jun & Xu Ling & Qian Juncheng, 2007. "Extending health insurance to the rural population : an impact evaluation of China's new cooperative medical scheme," Policy Research Working Paper Series 4150, The World Bank.
  6. Song, Lina & Appleton, Simon & Knight, John, 2006. "Why Do Girls in Rural China Have Lower School Enrollment?," World Development, Elsevier, vol. 34(9), pages 1639-1653, September.
  7. David M. Cutler & Jonathan Gruber, 1995. "Does Public Insurance Crowd Out Private Insurance?," NBER Working Papers 5082, National Bureau of Economic Research, Inc.
  8. Attanasio, Orazio & Rios-Rull, Jose-Victor, 2000. "Consumption smoothing in island economies: Can public insurance reduce welfare?," European Economic Review, Elsevier, vol. 44(7), pages 1225-1258, June.
  9. Kochar, Anjini, 1995. "Explaining Household Vulnerability to Idiosyncratic Income Shocks," American Economic Review, American Economic Association, vol. 85(2), pages 159-64, May.
  10. Jonathan Gruber & Aaron Yelowitz, 1999. "Public Health Insurance and Private Savings," Journal of Political Economy, University of Chicago Press, vol. 107(6), pages 1249-1274, December.
  11. Donald Cox & Zekeriya Eser & Emmanuel Jimenez, 1996. "Motives for Private Transfers over the Life Cycle: An Analytical Framework and Evidence for Peru," Boston College Working Papers in Economics 327., Boston College Department of Economics.
  12. Raj Chetty, 2005. "A General Formula for the Optimal Level of Social Insurance," NBER Working Papers 11386, National Bureau of Economic Research, Inc.
  13. Manuela Angelucci & Giacomo De Giorgi, 2009. "Indirect Effects of an Aid Program: How Do Cash Transfers Affect Ineligibles' Consumption?," American Economic Review, American Economic Association, vol. 99(1), pages 486-508, March.
  14. Mace, Barbara J, 1991. "Full Insurance in the Presence of Aggregate Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 928-56, October.
  15. Manuela Angelucci & Orazio Attanasio, 2013. "The Demand for Food of Poor Urban Mexican Households: Understanding Policy Impacts Using Structural Models," American Economic Journal: Economic Policy, American Economic Association, vol. 5(1), pages 146-78, February.
  16. Morduch, J., 1995. "Income Smoothing and Consumption Smoothing," Papers 512, Harvard - Institute for International Development.
  17. Rosenzweig, Mark R. & Wolpin, Kenneth I., 1989. "Credit Market Constraints, Consumption Smoothing and the Accumulation of Durable Production Assets in Low-Income Countries: Investments in Bullocks in India," Bulletins 7487, University of Minnesota, Economic Development Center.
  18. Xiaoyan Lei & Wanchuan Lin, 2009. "The New Cooperative Medical Scheme in rural China: does more coverage mean more service and better health?," Health Economics, John Wiley & Sons, Ltd., vol. 18(S2), pages S25-S46, July.
  19. Brown, Philip H. & Park, Albert, 2002. "Education and poverty in rural China," Economics of Education Review, Elsevier, vol. 21(6), pages 523-541, December.
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