Health Shocks in Perspective - How Do Health Shocks Compare to Agricultural and Labor Market Shocks? Evidence from Rural China
Posted: 6 Jul 2007
The first aim of this paper is to compare health shocks with other (labor market and agricultural) shocks in terms of their incidence (preliminary results suggest that crop failure is more common than health shocks), the factors determining their incidence, their impacts on income (do health shocks have a larger and longer-lasting impact on income than, say, agricultural shocks?), their impacts on household consumption (controlling for the size of income effect, do households find it easier to smooth consumption in the face of a health shock because neighbors are more inclined to be sympathetic and offer cash and in-kind assistance?). We also examine the formal and informal risk-sharing mechanisms in place to reduce the impacts of different types of shocks, and the strategies that households employ to mitigate the effects of different types of shocks (including withdrawing children from school). Finally, we analyze the extent to which different formal and informal risk-sharing mechanisms help mitigate the effects of different types of shocks - for example, do health insurance and safety net programs reduce the impacts of health shocks? The data we use come from a social protection survey conducted in rural China, inquiring about different types of shocks and mechanisms households use to mitigate their effects. In analyzing the impacts of shocks on consumption, we employ matching methods, comparing households experiencing shocks with households that are similar in a number of relevant respects.
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