EuHEA Seminar: Emmanuel Rukundo (University of Bonn)

Emmanuel Rukundo

Abstract

This paper is the first empirical analysis to assess the effect of health insurance premium changes on labour markets in the context of a developing country. In 2011, the government of Rwanda implemented a health insurance premium policy change that increased insurance premiums for non-poor individuals by 200 % while proving poor households with waivers. We apply difference-in-differences with matching on national representative cross-sectional data to estimate the effect of increased premiums on labour supply in the short and medium term. We find that premium increases reduced time allocation to non- agricultural activities while increasing time allocation to subsistence agricultural activities with limited effect on total time worked. We provide a conceptual framework which allows for endogenous household responses due to changes in the health insurance premium via income thresholds. Households reduce labour supply possibly due to the negative incen- tives to gain premium waivers, i.e. to be classified as poor. Our results suggest that re- visiting the community-based targeting might be worthwhile in addressing the unintended effects of a possibly flawed targeting method.

Discussant: Owen O'Donnell (Erasmus University Rotterdam)

Chair: Marcos Vera-Hernandez (University College London)