Is Consumption Insured against Illness? Evidence on Vulnerability of Households to Health Shocks in Rural Ethiopia

Asfaw, Abay; Braun, Joachim von

doi:10.1086/423255

“…Based on the theory of full insurance, Gertler and Gruber (2002) test and reject the hypothesis of consumption smoothing in the context of Indonesia, showing that households significantly reduce both labour supply and consumption patterns when hit by an adverse health event. Similarly, Asfaw and von Braun (2004) show that in Ethiopia illness has a significant negative impact on the stability and the level of household consumption. Focusing on the direct monetary costs of health, instead, Wagstaff (2007) finds evidence that the financial implications of ill health in Vietnam can be catastrophic, being associated with a significant reduction of consumption in households with no access to insurance (see also Dercon and Krishnan 2000, Baeza and Packard 2005, Bredenkamp et al 2010).…”

Section: Background Literature and Our Main Contributionmentioning

confidence: 94%

Parental health and child schooling

Bratti

¹

,

Mendola

²

2014

Journal of Health Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. Evidence on the role of parental health on child schooling is surprisingly thin. We explore this issue by estimating the short-run effects of parents' illness on child school enrollment. Our analysis is based on household panel data from Bosnia-Herzegovina, a country whose health and educational systems underwent extensive destruction during the 1992-1995 war. Using child fixed effects to correct for potential endogeneity bias, we find that -contrary to the common wisdom that shocks to the primary household earner should have more negative consequences for child education -it is especially maternal health that makes a difference as far as child schooling is concerned. Children whose mothers self-reported having poor health are about 7 percentage points less likely to be enrolled in education at ages 15-24. These results are robust to considering alternative indicators of parental health status such as the presence of limitations in the activities of daily living and depression symptoms. Moreover, we find that mothers' health shocks have more negative consequences on younger children and sons.JEL Classification: I21, O15

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“…Various forms of health insurance have been advocated as market based risktransfer mechanisms with the potential to guard against the impoverishing effects of ill health (see Gertler and Gruber 2002;Asfaw and Von Braun 2004). The recent proliferation of Community Based Health Insurance (CBHI) schemes in many developing countries emanates partly from a need to provide financial protection against unexpected health-care costs and to enhance access to modern health care.…”

Section: Introductionmentioning

confidence: 99%

Impact of Ethiopia's Community Based Health Insurance on Household Economic Welfare

Yilma¹,

Mebratie²,

Sparrow³

et al. 2015

World Bank Econ Rev

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“…Evidence on households' ability to smooth consumption in the short term over these economic impacts is mixed but tends to show that informal coping strategies such as dissaving, borrowing and assets sales can provide partial insurance (Townsend 1994, Genoni 2012, Islam and Maitra 2012, Mohanan 2013 but, particularly for the most severe health shocks, not full insurance (Dercon and Krishnan 2000, Gertler and Gruber 2002, Asfaw and Von Braun 2004. This research suggests that there are potential welfare gains from social insurance but that the latter is likely to partially crowd out informal insurance.…”

Section: Introductionmentioning

confidence: 94%

“…Previous research on the economic impact of illness and injury in low-and middle-income countries (LMICs) has been restricted to settings with little or no formal insurance of either medical expenses or earnings (Townsend 1994, Gertler and Gruber 2002, Genoni 2012, Asfaw and Von Braun 2004, Wagstaff 2007, Islam and Maitra 2012, Mohanan 2013. In this context, the evidence shows ill-health provokes increased out-of-pocket (OOP) spending on medical care and reduced work activity with associated income loss (Gertler and Gruber 2002, Lindelow and Wagstaff 2005, Wagstaff 2007).…”

Section: Introductionmentioning

confidence: 99%

Economic Impact of Illness With Health Insurance But Without Income Insurance

Limwattananon

¹

,

O’Donnell

²

,

Doorslaer

³

2015

SSRN Journal

0

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. April 2015 Terms of use: Documents in AbstractWe examine economic vulnerability to illness when, as for informal sector workers in Thailand, there is universal coverage for health care but earnings losses are uninsured. Even with comprehensive health care entitlement, severe illness that strikes an initially healthy worker is found to raise out-of-pocket medical expenses by around two thirds and increase the probability that medical spending absorbs more than a tenth of the household budget by nine percentage points. Moreover, severe illness reduces the probability of remaining in employment by 18 points and precipitates a reduction in household labor income of almost one third. Despite the rise in medical expenses and fall in earnings, households are able to maintain expenditure on goods and services other than medical care by drawing on remittances and informal transfers, cutting back on saving, and by borrowing. In the short term, informal insurance fills gaps left uncovered by formal insurance but there is likely to be substantial exposure to economic risks associated with long-term illness.JEL Classification: I13, J46, O12

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Is Consumption Insured against Illness? Evidence on Vulnerability of Households to Health Shocks in Rural Ethiopia

Cited by 101 publications

References 8 publications

Parental health and child schooling

Parental health and child schooling

Impact of Ethiopia's Community Based Health Insurance on Household Economic Welfare

Economic Impact of Illness With Health Insurance But Without Income Insurance

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