Social Health Insurance and Labor Market Outcomes : Evidence from Central and Eastern Europe, and Central Asia

OBJECTIVE: The implications of social health insurance (SHI) for labor markets have featured prominently in recent debates over the merits of SHI and general revenue financing. It has been argued that by raising the nonwage component of labor costs, SHI reduces firms' demand for labor, lowers e...

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Main Authors:	Wagstaff, A., Moreno-Serra, R.
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Asia, Central Employment Europe Government Financing Health Services Health Insurance Econometric Models National Health Programs
Online Access:	http://hdl.handle.net/10986/5150

id	okr-10986-5150
recordtype	oai_dc
spelling	okr-10986-51502021-04-23T14:02:21Z Social Health Insurance and Labor Market Outcomes : Evidence from Central and Eastern Europe, and Central Asia Wagstaff, A. Moreno-Serra, R. Asia, Central Employment Europe Government Financing Health Services Health Insurance Econometric Models National Health Programs OBJECTIVE: The implications of social health insurance (SHI) for labor markets have featured prominently in recent debates over the merits of SHI and general revenue financing. It has been argued that by raising the nonwage component of labor costs, SHI reduces firms' demand for labor, lowers employment levels and net wages, and encourages self-employment and informal working arrangements. At the national level, SHI has been claimed to reduce a country's competitiveness in international markets and to discourage foreign direct investment (FDI). The transition from general revenue finance to SHI that occurred during the 1990s in many of the central and eastern European and central Asian countries provides a unique opportunity to investigate empirically these claims. METHODOLOGY/APPROACH: We employ regression-based generalizations of difference-in-differences (DID) and instrumental variables (IV) on country-level panel data from 28 countries for the period 1990-2004. FINDINGS: We find that, controlling for gross domestic product (GDP) per capita, SHI increases (gross) wages by 20%, reduces employment (as a share of the population) by 10%, and increases self-employment by 17%. However, we find no significant effects of SHI on unemployment (registered or self-reported), agricultural employment, a widely used measure of the size of the informal economy, or FDI. IMPLICATIONS FOR POLICY: We do not claim that our results imply that SHI adoption everywhere must necessarily reduce employment and increase self-employment. Nonetheless, our results ought to serve as a warning to those contemplating shifting the financing of health care from general revenues to a SHI system. 2012-03-30T07:31:33Z 2012-03-30T07:31:33Z 2009 Journal Article Adv Health Econ Health Serv Res 0731-2199 (Print) 0731-2199 (Linking) http://hdl.handle.net/10986/5150 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article Central Asia Central Europe Eastern Europe
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Asia, Central Employment Europe Government Financing Health Services Health Insurance Econometric Models National Health Programs
spellingShingle	Asia, Central Employment Europe Government Financing Health Services Health Insurance Econometric Models National Health Programs Wagstaff, A. Moreno-Serra, R. Social Health Insurance and Labor Market Outcomes : Evidence from Central and Eastern Europe, and Central Asia
geographic_facet	Central Asia Central Europe Eastern Europe
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	OBJECTIVE: The implications of social health insurance (SHI) for labor markets have featured prominently in recent debates over the merits of SHI and general revenue financing. It has been argued that by raising the nonwage component of labor costs, SHI reduces firms' demand for labor, lowers employment levels and net wages, and encourages self-employment and informal working arrangements. At the national level, SHI has been claimed to reduce a country's competitiveness in international markets and to discourage foreign direct investment (FDI). The transition from general revenue finance to SHI that occurred during the 1990s in many of the central and eastern European and central Asian countries provides a unique opportunity to investigate empirically these claims. METHODOLOGY/APPROACH: We employ regression-based generalizations of difference-in-differences (DID) and instrumental variables (IV) on country-level panel data from 28 countries for the period 1990-2004. FINDINGS: We find that, controlling for gross domestic product (GDP) per capita, SHI increases (gross) wages by 20%, reduces employment (as a share of the population) by 10%, and increases self-employment by 17%. However, we find no significant effects of SHI on unemployment (registered or self-reported), agricultural employment, a widely used measure of the size of the informal economy, or FDI. IMPLICATIONS FOR POLICY: We do not claim that our results imply that SHI adoption everywhere must necessarily reduce employment and increase self-employment. Nonetheless, our results ought to serve as a warning to those contemplating shifting the financing of health care from general revenues to a SHI system.
format	Journal Article
author	Wagstaff, A. Moreno-Serra, R.
author_facet	Wagstaff, A. Moreno-Serra, R.
author_sort	Wagstaff, A.
title	Social Health Insurance and Labor Market Outcomes : Evidence from Central and Eastern Europe, and Central Asia
title_short	Social Health Insurance and Labor Market Outcomes : Evidence from Central and Eastern Europe, and Central Asia
title_full	Social Health Insurance and Labor Market Outcomes : Evidence from Central and Eastern Europe, and Central Asia
title_fullStr	Social Health Insurance and Labor Market Outcomes : Evidence from Central and Eastern Europe, and Central Asia
title_full_unstemmed	Social Health Insurance and Labor Market Outcomes : Evidence from Central and Eastern Europe, and Central Asia
title_sort	social health insurance and labor market outcomes : evidence from central and eastern europe, and central asia
publishDate	2012
url	http://hdl.handle.net/10986/5150
_version_	1764394133828403200

Social Health Insurance and Labor Market Outcomes : Evidence from Central and Eastern Europe, and Central Asia

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