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The Spending Responses to Adverse Health Shocks: Evidence from a Panel of Colombian Households

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  • Cortes, Darwin
  • Gallegos, Andrés
  • Perez Perez, Jorge

Abstract

We analyze the effect of adverse health shocks on households' different expenditure shares using a difference in differences approach. We find that households engage in substitution between health and food spending in response to the negative health shocks. We find substantial heterogeneity in this trade-off between current and future health mediated by access to social protection, job contract type, and location (urban-rural). Households from rural areas, with heads holding informal jobs, and without access to safety nets, are more vulnerable than others. We discuss several policy implications.

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  • Cortes, Darwin & Gallegos, Andrés & Perez Perez, Jorge, 2021. "The Spending Responses to Adverse Health Shocks: Evidence from a Panel of Colombian Households," SocArXiv vh2qa, Center for Open Science.
    • Handle: RePEc:osf:socarx:vh2qa
    DOI: 10.31219/osf.io/vh2qa
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    1. Cano, Alexander & Cortés, Darwin & Mantilla, César & Prada, Laura & Restrepo, Medardo, 2022. "The trade-off between liquidity and insurance: voucher payments in a lab-in-the-field experiment with Colombian rural workers," Working papers 88, Red Investigadores de Economía.

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