Can Households Cope with Health Shocks in Vietnam?

Abstract

This paper investigates the economic impact of health shocks for working age adults in Vietnam during 2004-08, using a fixed effect specification. Health shocks cover disability and morbidity and are measured by ‘days unable to carry out regular activity’, ‘days in bed due to illness/injury’, and ‘hospitalisation’. Overall, Vietnamese households are able to smooth total non-health expenditures in the short run in the face of a significant rise in out of pocket health expenditures. However, this is accomplished through vulnerability-enhancing mechanisms, especially in rural areas, including increased loans and asset sales, and decreased education expenditures. Female-headed and rural households are found to be least able to protect consumption. Results highlight the need to extend and deepen social protection and universal health coverage.

Keywords: health shocks; disability; morbidity; coping mechanisms; expenditures; Vietnam

JEL Classification: C23, I12