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Health Shocks and Overindebtedness: A Panel Data Analysis from Rural Viet Nam

Author

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  • Chhay, Panharoth

    (Asian Development Bank Institute)

  • Rahut, Dil

    (Asian Development Bank Institute)

Abstract

Rural households in developing countries have limited capacity to cope with and manage shocks, thereby resulting in chronic poverty, indebtedness, and a decline in overall well-being. We analyze the effects of health shocks on overindebtedness in rural Viet Nam using four rounds of a balanced panel data set of about 1,750 households observed over a decade (2007, 2010, 2013, 2016). Employing the household-level fixed-effect model, we find that health shocks reduce household income and increase health expenditure among rural Vietnamese households. We also find that households cope with health shocks mainly by borrowing from more sources. Households experiencing health shocks are 2.2 to 3.1 percentage points more likely to be overindebted, which occurs primarily among households without health insurance, suggesting that social health insurance can reduce households’ vulnerability to the consequences of health shocks. These findings strongly support efforts to expand access to social health insurance in rural Viet Nam.

Suggested Citation

  • Chhay, Panharoth & Rahut, Dil, 2022. "Health Shocks and Overindebtedness: A Panel Data Analysis from Rural Viet Nam," ADBI Working Papers 1311, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:1311
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    More about this item

    Keywords

    health shocks; overindebtedness; social health insurance; household-level fixed effects; rural Viet Nam;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development

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