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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
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NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway

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Web page: http://www.nhh.no/sam/
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  1. 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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  7. 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.
  8. 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.
  9. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 103-114, Summer.
  10. Raj Chetty & Adam Looney, 2005. "Consumption Smoothing and the Welfare Consequences of Social Insurance in Developing Economies," NBER Working Papers 11709, National Bureau of Economic Research, Inc.
  11. Raj Chetty, 2005. "A General Formula for the Optimal Level of Social Insurance," NBER Working Papers 11386, National Bureau of Economic Research, Inc.
  12. Kochar, Anjini, 1995. "Explaining Household Vulnerability to Idiosyncratic Income Shocks," American Economic Review, American Economic Association, vol. 85(2), pages 159-64, May.
  13. 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.
  14. 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.
  15. 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.
  16. David M. Cutler & Jonathan Gruber, 1996. "Does Public Insurance Crowd out Private Insurance?," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 391-430.
  17. Rosenzweig, Mark R & Wolpin, Kenneth I, 1993. "Credit Market Constraints, Consumption Smoothing, and the Accumulation of Durable Production Assets in Low-Income Countries: Investment in Bullocks in India," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 223-44, April.
  18. 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.
  19. 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.
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