The Effect of Transportation Benefits on Health and Consumption Among the Elderly: Quasi-Experimental Evidence from Urban China

Abstract

This study estimates the causal effect of transportation subsidies or similar benefits on the health of the elderly. We exploit a discontinuity in the probability of receiving transportation benefits induced by an age-based policy to take account of the endogeneity of treatment status. Our baseline IV results indicate that receiving public transportation benefits significantly improves elderly people’s health condition by approximately 10 percentage points. The results are robust under different specifications and placebo tests. Further tests on possible channels show that the health effect is driven by increasing food consumption and health care utilization, but not by the amount of exercise done.