The impact of health insurance on households’ financial choices: Evidence from Vietnam

This paper investigates the impact of health insurance on families' financial service choices in Vietnam using TVSEP data from three waves in 2013, 2016, and 2017. The endogeneity is handled via a recursive multivariate probit model. The findings indicate that while health insurance has no effect on private health insurance, it has a positive effect on savings and investments and a negative effect on credit choice. The multivariate probit model's results are robust to both the instrumental variable two-stage least squares model and the bivariate probit model. In addition, correlations between error components in financial service choice equations indicate a possible pattern of household financial usage. The results suggest that health insurance improves households' financial well-being. The implication of the findings is that when developing social security policies aimed at achieving universal health insurance, the influence of health insurance on household finances should not be underestimated.     

Investment, uncertainty and irreversibility

This paper investigates the irreversibility of investments and the impact this has on the nature of the relationship between investment and uncertainty. The empirical analysis uses firm‐level data and is based on a survey of 210 rice‐milling firms in the Mekong River Delta in Vietnam, which was carried out during the year 2000. We show that uncertainty reduces investment of rice millers in the presence of irreversibility, as is predicted by the real options approach to investment. We do not find evidence that the negative association between uncertainty and investment is influenced by the degree of irreversibility.     

Work-limiting health,earnings, and employment: an analysis with SIPP data

ABSTRACT

This study examines the role of work-limiting health conditions on employed people’s earnings, employment status, and working hours, and distinguishes between the different degree and severity of predictable shocks. Using data from the 2004 Survey of Income and Program Participation (SIPP), we evaluate the impact of any work-limiting health condition as well as a subset of health conditions that appear to arrive largely exogenously on post-onset earnings, employment, and working hours. We find that people who report being employed and later experience the onset of any work-limiting health condition tend to have lower subsequent earnings, a reduced probability of being employed, and fewer working hours per month compared to those who remain healthy. The adverse impact is even greater for people with health conditions that arrive less predictably. We use a difference-in-differences regression model with person and year fixed effects as the primary estimation method.     

Retirement and health services utilization in a low-income country*

We estimate the causal effects of retirement on health services utilization in Vietnam. Using authorized retirement ages as instruments for exogenous changes in retirement, we find positive and strong effects of retirement on outpatient health services in the public health sector. Retirement increases the probability of an outpatient visit by 51 percentage points for males and 36 percentage points for females, and the frequency of outpatient visits by 1.4 times for males and 2 times for females. However, we find no effect on the use of public inpatient services as well as private health services.     

A dynamic‐efficiency rationale for public investment in the health of the young

In this paper we assume away standard distributional and static‐efficiency arguments for public health and instead seek a dynamic efficiency rationale. We study a lifecycle model wherein young agents make health investments to reduce mortality risk. We identify a welfare rationale for public health under dynamic efficiency and exogenous mortality even when private and public investments are perfect substitutes. If health investment reduces mortality risk but individuals do not internalize its effect on the life‐annuity interest rate, the “Philipson‐Becker effect” emerges; when the young are net borrowers, this works together with dynamic efficiency to support a role for public health.     

Intergenerational Transmission of Noncommunicable Chronic Diseases

We introduce a theoretical framework that contributes to the understanding of noncommunicable chronic diseases (NCDs) epidemics: even if NCDs are noninfectious diseases, they may spread due to the social transmission of unhealthy activities such as unhealthy diet, physical inactivity, and smoking. In particular, we study the intergenerational dimension of this mechanism. We find that, due to the social transmission of NCDs, agents choose lower health conditions and higher unhealthy activities than what is socially optimal. Taxes on unhealthy activities, that may subsidize health investments, can be used to restore the social optimum. Finally, our model is consistent with the existence of regional asymmetries regarding the prevalence of obesity and NCDs.     

University‐firm competition in basic research and university funding policy

We characterize equilibrium investments in basic research by the commercial and university sectors contingent on public funding of the university. We find that firms invest in basic research despite the opportunities for free riding and we present conditions under which firms even have incentives to augment the public funding to the university. We characterize the socially optimal volume of public funding for the university sector. Finally, we compare total investments in a mixed duopoly with those of duopolies composed of two universities as well as two profit‐maximizing firms.     

Did Vietnam veterans get sicker in the 1990s? The complicated effects of military service on self-reported health

The veterans disability compensation (VDC) program, which provides a monthly stipend to disabled veterans, is the third largest American disability insurance program. Since the late 1990s, VDC growth has been driven primarily by an increase in claims from Vietnam veterans, raising concerns about costs as well as health. We use the draft lottery to study the long-term effects of Vietnam-era military service on health and work in the 2000 Census. We find no evidence that military service affected overall employment rates or overall work-limiting disability rates (that is, health conditions that make work difficult). At the same time, military service sharply increased federal transfer income, especially for lower skilled white men, among whom there was also a large negative impact on employment and a marked increase in disability rates. The differential impact of Vietnam-era service on low-skilled men cannot be explained by more combat or war-theatre exposure for the least educated, because high school graduates were at least as likely to be exposed to combat or war theatre as the less-educated. This leaves the relative attractiveness of VDC for less-skilled men and the work disincentives embedded in the VDC system as a likely explanation for our findings.     

Are Australia's tourism markets converging?

Many governments in low-income countries have promoted voluntary health insurance schemes in recent years, with the principal aim of improving access to services amongst those working in the informal economy. Few attempts to understand demand for such schemes exist, particularly in light of the importance of informal social security arrangements for many households. A model of demand for health insurance is developed reflecting this context, and estimated using data from Vietnam. The results show that informal financial networks may crowd out government promoted health insurance. Implications for theory and policy are discussed.     

Institutions for private sector development and pro‐poor growth: Evidence from Vietnam

Using the Vietnam Household Living Standards Survey 2008, we explore the differences in pro‐poor growth performance in provinces in Vietnam according to the quality of the provinces’ institutions that support private sector activity. We exploit the localized and varying effect of French colonial legacy across Vietnamese provinces to address the endogeneity of institutions. We find strong and robust evidence of a positive effect of good‐quality institutions that support private sector activity on pro‐poor growth and that enhanced working hours and hourly wage and extended income from non‐farm self‐employment play critical roles in this outcome.     

Effects of health insurance on labour supply: evidence from the health care fund for the poor in Vietnam

The expansion of health insurance in emerging countries raises concerns about the unintended negative effects of health insurance on labour supply. This article examines the labour supply effects of the Health Care Fund for the Poor (HCFP) in Vietnam in terms of the number of work hours per month and labour force participation (the probability of employment). Employing various matching methods combined with a Difference-in-Differences approach on the Vietnam Household Living Standard Surveys 2002–2006, we show that the HCFP, which aims to provide poor people and disadvantaged minority groups with free health insurance, has a negative effect on labour supply. This is manifested in both the average number of hours worked per month and the probability of employment, suggesting the income effect of the HCFP. Interestingly, the effects are mainly driven by the non-poor recipients living in rural areas, raising the question of the targeting strategy of the programme.     

Electric Utility Restructuring,Regulation of Distribution Utilities,and the Fallacy of "Avoided Cost" Rules

We show that commonly used "avoided cost" rules, which evaluate investment alternatives by comparing their costs to forecasts of future expected cost, are fundamentally flawed for choosing local area investments in distribution capacity. Use of avoided cost rules: 1) confuses cost-effectiveness tests with benefit-cost tests; 2) makes inappropriate marginal comparisons and violates necessary optimality conditions because of the "lumpy" nature of many distribution system investments; 3) fails to incorporate the effects of uncertainty properly; 4) necessarily leads to excess deferral or traditional distribution capacity investments with distributed generation and DSM investments; and 5) does not lead to lowest expected cost investment plans. We conclude by outlining a more appropriate approach to evaluating distribution investments based on evaluations of actual cash flows associated with investment alternatives under uncertainty.     

Proactive planning and valuation of transmission investments in restructured electricity markets

Traditional methods of evaluating transmission expansions focus on the social impact of the investments based on the current generation stock which may include firm generation expansion plans. In this paper, we evaluate the social welfare implications of transmission investments based on equilibrium models characterizing the competitive interaction among generation firms whose decisions in generation capacity investments and production are affected by both the transmission investments and the congestion management protocols of the transmission system operator. Our analysis shows that both the magnitude of the welfare gains associated with transmission investments and the location of the best transmission expansions may change when the generation expansion response is taken into consideration. We illustrate our results using a 30-bus network example. An erratum to this article can be found at     

The impact of public investment in medical imaging technology: an interagency collaboration in evaluation

The Canada Foundation for Innovation (CFI) and the Canadian Institutes of Health Research (CIHR) allied to analyze the impact of their investments in medical imaging research. The CFI funds capital and operating programs for research infrastructure, and CIHR's mandate concentrates its funding on research activity. It happens that CIHR-funded research consumes CFI-funded infrastructure as an input in the innovation process. Apart from a few partnered programs, by design there is no coordination between CFI and CIHR funding decisions. Together, these agencies invested $916 million over a 14-year-period. In this paper, we evaluate the economic and health benefits from advancements in one funded area, namely computed tomography perfusion (CTP). CTP is an imaging technique that uses computed tomography to measure blood flow in organs and tissues. It is mostly used to assess acute ischemic stroke. The net social benefits attributable to these investments are substantially positive: the benefit-to-cost ratio is estimated to be between 6.66-to-1 and 9.99-to-1. We review how public investments from multiple funders comingle in the innovation process to deliver social value and improved health outcomes.     

Community-based development and poverty alleviation: An evaluation of China's poor village investment program

We conduct the first systematic evaluation of the world's largest community-based development program—China's flagship poverty alleviation program began in 2001 which finances public investments in designated poor villages based on participatory village planning. We use matching methods and a panel household and village data set with national coverage to compare changes from 2001 to 2004 in designated poor villages that began plan investments and in designated poor villages that had yet to begin plan investments. We find that the program significantly increased both government- and village-financed investments. While the program did not increase the income or consumption of poorer households, it did increase the income and consumption of richer households by 6.1 to 9.2%. We also find suggestive evidence that governance matters in the distribution of program benefits. Relative gains were greater for richer households in villages with more educated leaders, and higher quality village committees delivered greater benefits to both richer and poorer households.     

China’s Investments in Skills

This paper discusses the benefits of investment in skills in China. We highlight the achievements China has made over time in human capital investments and the new challenges that have emerged as the country develops. To fuel China’s further economic growth and social developments, it is essential to take a more holistic view on skill investments. We suggest policies that promote both economic efficiency and social mobility.     

Macroeconomic adjustment under loose financing conditions in the construction sector

We provide a model with sector-specific debt-collateral constraints to analyze how asymmetric financing conditions across sectors affect the aggregate investment, credit and output composition. In our model, investments in the construction sector allow for higher leverage than investments in the non-durable consumption goods sector. When borrowing constraints bind in both sectors, unit returns in the construction sector are lower due to a positive pledgeability premium, and changes in interest rates have a non-monotonic effect in the sectoral composition of investment. Specifically, a fall in interest rates triggers a relative rise in investment in the consumption goods sector when rates are relatively high, whereas the opposite effect obtains when rates are sufficiently low. We argue that this prediction of the model, which depends critically on the asymmetries of financing conditions across sectors, is consistent with the evidence for a number of OECD countries during the decade before the 2007/2008 crisis     

Spring cleaning: rural water impacts, valuation, and property rights institutions

Using a randomized evaluation in Kenya, we measure health impacts of spring protection, an investment that improves source water quality. We also estimate households' valuation of spring protection and simulate the welfare impacts of alternatives to the current system of common property rights in water, which limits incentives for private investment. Spring infrastructure investments reduce fecal contamination by 66%, but household water quality improves less, due to recontamination. Child diarrhea falls by one quarter. Travel-cost based revealed preference estimates of households' valuations are much smaller than both stated preference valuations and health planners' valuations, and are consistent with models in which the demand for health is highly income elastic. We estimate that private property norms would generate little additional investment while imposing large static costs due to above-marginal-cost pricing, private property would function better at higher income levels or under water scarcity, and alternative institutions could yield Pareto improvements.     

Migration and Credit Constraints: Theory and Evidence from Vietnam

The new economics of labor migration (NELM) frequently emphasizes the importance of migration as a way for rural households to overcome credit constraints. If this hypothesis is correct, then the credit constraint is a motivation for migration (a relaxation of this constraint would encourage less migration). Conventionally, it is believed that migration is costly and has to be financed with borrowed capital, so the credit constraint is a deterrent of migration (a relaxation of this constraint would encourage more migration). In this paper, an agricultural household model is developed to study whether the credit constraint is a motivation for or a deterrent to migration. The model's result confirms the NELM's hypothesis: for households with high demand for agricultural investments and high net migration return, migration is used as a way to finance capital investments. Using data from four provinces in Vietnam, preliminary evidence is found supporting this hypothesis.     

GDP competition and corporate investment: Evidence from China

This study examines whether and how macroeconomic performance competition is related to investment at firm level. We use GDP competition as a proxy of dynamic macroeconomic conditions. We find that the effect of GDP competition on firm investments is significantly positive. We also find that GDP competition destroys investment efficiency significantly, especially by increasing overinvestment. Further tests show that GDP competition is more likely to affect the investment decisions of firms controlled by governments and firms located in regions with low marketization. In addition, our analyses reveal that the provincial officials facing competitive pressure are more likely to be promoted if firm investments accelerate. We use alternative proxies to measure GDP competition and find similar results that support our inference. Our findings support the notion that GDP competition of governments distorts investment behaviour. The present paper also elucidates investment problems and dilemmas faced by emerging economies.