The Effect of China’s Health Insurance on the Labor Supply of Middle-aged and Elderly Farmers

Lingchen Liu, Renji Sun, Yan Gu and Kung Cheng Ho
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Lingchen Liu: School of Statistics, Shanxi University of Finance and Economics, Taiyuan 030006, China
Renji Sun: The School of Business, East China University of Political Science and Law, Shanghai 201620, China
Yan Gu: Fanhai International School of Finance, Fudan University, Shanghai 200433, China
Kung Cheng Ho: Pearl River Delta Collaborative Innovation Center of Scientific Finance and Industry, Institute of Regional Finance, Guangdong University of Finance & Economics, Guangzhou 510320, China

IJERPH, 2020, vol. 17, issue 18, 1-23

Abstract: Social security primarily improves residents’ welfare and ensures labor market sustainability. This study presents a new view of the association between health insurance and labor supply by using data from the China Health and Retirement Longitudinal Study. The results reveal that the health insurance system has a remarkable effect on labor supply. The health insurance coverage tends to encourage middle-aged and elderly farmers to increase their farm labor participation rate and working time, especially for their household agricultural labor participation rate and working time. However, it also reduces the non-farm labor participation rate and working time. Different types of health insurance have diverse effects on labor supply. The new cooperative medical insurance has a stronger pull-back effect. It encourages the middle-aged and elderly farmers to leave the urban non-farm sector and transfer to rural areas to engage in their household agricultural work. The urban employee medical insurance encourages farmers to reduce self-employed labor supply and increase employed work. The supplemental health insurance tends to reduce the labor supply of farm employed and non-farm labor supply, but improve the farm labor supply. Furthermore, urban resident medical insurance and government medical insurance encourage farmers to quit directly from the labor market. In conclusion, the health insurance system is facilitating change in the labor market. Policy-makers should pay full attention to such impacts while improving the health insurance system’s design and operation in China.

Keywords: health insurance; middle-aged and elderly farmers; labor supply (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2020
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