Can Health Insurance Coverage Improve Educational Attainment? Evidence from China

Abstract

This paper bridges health policy with education outcomes through 7 waves of a nationally-representative health survey in China. Through constructing an index of health conditions with CHNS (1991-2011) data, we find significant negative correlation between health conditions in period (t-1) and education outcomes in period t. We further treat the implementation of New Cooperative Medical Scheme (NCMS) in rural China as quasi-natural experiment and evaluate the effect of health insurance coverage on education attainment of individuals at age of 18-25. We find that joining NCMS can increase individual’s schooling by 0.54, 0.75 and 0.83 years in the east, central and west areas, respectively. The effect is larger for those at lower education levels, i.e. for individuals at 15% percentile schooling level, the increases in schooling are 1.12, 1.43 and 1.72 years in the east, central and west areas, respectively. The effect is larger for women than men, for the unhealthy, risk-avoiding treatment group relative to control group, and sustains longer in the central area than other areas. The insurance clauses of outpatient medical services compensation in NCMS generate stronger effect on education outcomes.

Keywords: New Cooperative Medical Scheme (NCMS), Educational Attainment, Difference-in-Difference, Triple Difference Method