Effect of Health Insurance Premium Changes on Labour Supply: Evidence from Rwanda

ZEF online colloquium
February 25, 2021

In 2011, the government of Rwanda implemented a health insurance premium policy change that led to a 200 percent increase in premiums to richer households and provided a premium waiver to poorer households identified through a community-based targeting process. We use three rounds of nationally representative cross-sectional surveys and apply a difference-in-differences with kernel matching to estimate the effect of this policy change on various labour market outcomes in the short and medium term. We find that premium increases had retrogressive effects on allocation of time to non-agricultural and wage employment activities and also reduced the desire for additional work. On the other hand, we do not observe significant effects from premium waivers. The policy implications of this paper suggests that a revisiting of the community-based targeting is worthwhile in addressing the unintended effects of a possibly flawed targeting method.

Speaker:
Emmanuel is a research associate at the Institute for Food and Resource Economics, University of Bonn.

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