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The effect of the new cooperative medical scheme on rural labor supply in China

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  • Liu, Xiao
  • Burge, Gregory S.

Abstract

In 2003, China launched the New Cooperative Medical Scheme (NCMS), a public healthcare plan targeting rural households. While the literature mostly considers the impact of NCMS coverage on health outcomes, we investigate potential impacts on labor supply and household savings levels. To mitigate endogeneity bias driven by households self-sorting into NCMS coverage, we use panel data spanning two decades to estimate difference-in-differences and instrumental variables (2SLS) models. We find NCMS coverage reduced aggregate labor supply by roughly 8%. Consistent with Borjas (2003), we find the NCMS impacts are larger for higher income households.

Suggested Citation

  • Liu, Xiao & Burge, Gregory S., 2024. "The effect of the new cooperative medical scheme on rural labor supply in China," China Economic Review, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:chieco:v:85:y:2024:i:c:s1043951x24000488
    DOI: 10.1016/j.chieco.2024.102159
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    References listed on IDEAS

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    More about this item

    Keywords

    New cooperative medical scheme; Labor supply; Health insurance;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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