Critical Illness Insurance and Consumption Inequality: Evidence from Rural China

Yuhu Liang and Jiehong Zhou

China & World Economy, 2025, vol. 33, issue 5, 167-195

Abstract: Consumption is a key driver of economic growth. However, the impact of critical illness insurance (CII) on consumption inequality remains underexplored. Using data from the China Health and Retirement Longitudinal Study from 2011 to 2018, this study employed a staggered difference‐in‐differences method to investigate this effect. It found that CII increased consumption inequality significantly among rural households. This effect arose primarily from disparities in future expectations rather than direct increases in income inequality. In terms of consumption structure, CII widened consumption inequality in housing, daily necessities, transportation, communication, and health care, but had no significant effect on food, clothing, education, recreation, or other services. The effect also varied across different regions, income levels, and quantiles. These findings offer important insights for policymakers in developing countries who aim to reduce rural consumption inequality through health‐care insurance optimization.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:bla:chinae:v:33:y:2025:i:5:p:167-195

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