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Lending to Parents and Insuring Children: Is There a Role for Microcredit in Complementing Health Insurance in Rural China?
Author(s) -
You Jing
Publication year - 2016
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.3168
Subject(s) - regression discontinuity design , business , government (linguistics) , china , consumption (sociology) , panel data , public economics , economic growth , actuarial science , demographic economics , economics , medicine , political science , social science , philosophy , linguistics , pathology , sociology , law , econometrics
This paper assesses the causal impact on child health of borrowing formal microcredit for Chinese rural households by exploiting a panel dataset (2000 and 2004) in a poor northwest province. Endogenous borrowing is controlled for in a dynamic regression‐discontinuity design creating a quasi‐experimental environment for causal inferences. There is causal relationship running from formal microcredit to improved child health in the short term, while past borrowing behaviour has no protracted impact on subsequent child health outcomes. Moreover, formal microcredit appears to be a complement to health insurance in improving child health through two mechanisms—it enhances affordability for out‐of‐pocket health care expenditure and helps buffer consumption against adverse health shocks and financial risk incurred by current health insurance arrangements. Government efforts in expanding health insurance for rural households would be more likely to achieve its optimal goals of improving child health outcomes if combined with sufficient access to formal microcredit. Copyright © 2015 John Wiley & Sons, Ltd.