Dual Practice of Health Workers: Theory and Evidence from Indonesia

53 Pages Posted: 28 May 2017 Last revised: 27 Dec 2018

See all articles by Paula Gonzalez

Paula Gonzalez

Universidad Pablo de Olavide

Gabriel Montes-Rojas

City University of London

Sarmistha Pal

University of Surrey; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: December 23, 2018

Abstract

The paper assesses the impact of physicians' dual practice on public health services. Using a simple theoretical model we conjecture that dual practice may increase the number of patients seen but reduce hours spent at public facilities if public physicians lack motivation and/or if their opportunity costs are very large. Using health-facility (known as puskesmas) level panel data from Indonesia, we then test the validity of these conjectures, relying on the exogenous variation in the initiation of private practice among puskesmas heads after a 1997 health regulation (conditional on individual factors influencing private practice). Results using a difference-in-difference fuzzy regression discontinuity design, comparing the public health provision measures of eligible and non-eligible workers before and after the regulation support our conjectures. We also find evidence of weak monitoring, lack of motivation and high opportunity costs of public service provision explaining the results.

Keywords: Dual practice of health professionals; Ministry of health regulation 916; Weak monitoring; Weak motivation; High opportunity costs of public service; Difference-in-difference fuzzy regression discontinuity design; Indonesia

JEL Classification: I10, I18, J2, J44, J45, O1

Suggested Citation

Gonzalez, Paula and Montes-Rojas, Gabriel and Pal, Sarmistha, Dual Practice of Health Workers: Theory and Evidence from Indonesia (December 23, 2018). Available at SSRN: https://ssrn.com/abstract=2975485 or http://dx.doi.org/10.2139/ssrn.2975485

Paula Gonzalez

Universidad Pablo de Olavide ( email )

Ctra. Utrera, Km.1
Sevilla, Seville 41010
Spain
+34 954 34 83 80 (Phone)
+34 954 34 93 39 (Fax)

Gabriel Montes-Rojas

City University of London ( email )

Northampton Square
London, EC1V OHB
United Kingdom

Sarmistha Pal (Contact Author)

University of Surrey ( email )

Stag Hill
Guildford, England GU2 7XH
United Kingdom
01483 683995 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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