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

Xiao Liu and Gregory S. Burge

China Economic Review, 2024, vol. 85, issue C

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.

Keywords: New cooperative medical scheme; Labor supply; Health insurance (search for similar items in EconPapers)
JEL-codes: H51 I18 J3 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:85:y:2024:i:c:s1043951x24000488

DOI: 10.1016/j.chieco.2024.102159

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