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

Panharoth Chhay () and Dil Rahut
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Panharoth Chhay: Asian Development Bank Institute

No 1311, ADBI Working Papers from 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.

Keywords: health shocks; overindebtedness; social health insurance; household-level fixed effects; rural Viet Nam (search for similar items in EconPapers)
JEL-codes: E21 E24 I13 I15 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2022-05
New Economics Papers: this item is included in nep-agr, nep-dev, nep-hea, nep-sea and nep-tra
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Citations: View citations in EconPapers (1)

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