Three Essays on Health and Education: Evaluating Current Policies in China

Abstract

This thesis focuses on three policies in China in the context of a shift in policy design from economic efficiency targets to balancing economic goal and social equity. In doing so, this thesis aims to contribute to the literature the policy evaluation related to the human capital dynamics in a booming transition economy. The first essay studies the 1999 Higher Education Reform that aimed to boost the general level of education and the country’s domestic demand by increasing both university enrolment quotas and the level of tuition fees. Using micro data, I employ a MNL model to explore the schooling, working and migration choices of rural youth after their 9-year compulsory education. Results show a significantly negative policy effect on continuing education for rural students. I also find strong heterogeneity in policy effects, which suggests that the reform further increased educational disparity between rich and poor. The second essay evaluates the New Cooperative Medical Scheme (NCMS), a voluntary health insurance plan that was established in 2003 in an attempt to protect rural residents against financial risks related to catastrophic medical costs. DID findings suggest that NCMS eligibility had no effect on the out-of-pocket costs (i.e., average intension to treat) of chronically ill people. Moreover, our IV results suggest only slight moral hazard effects on health utilisation (less than 4%). However, people with chronic conditions appear 20.7% and 16.8% more likely to use (general) formal care and outpatient care, respectively, and hence incur higher out-of-pocket costs. The third essay investigates the impact of the “Zero Profit” policy (implemented in 2009) for the rural residents in Fujian Province. Using micro-level administrative data, we employ OLS, PSM and DID models to identify the policy effects on a number of medical spending-related outcomes. Results suggest that the policy generated roughly 1.8% reduction in the daily medical fees per patient, and 3.8% increase in non-essential drugs expenditure. Doctors reacted to the policy by increasing length of hospital stay (by 4.2%), which led to a 5.9% increase in the out-of-pocket costs paid by their patients.