Public Health Insurance and the Labor Market: Evidence from China’s Urban Resident Basic Medical Insurance


ShanghaiTech SEM Working Paper No. 2019-003

Wei Si 

ShanghaiTech University


This paper provides empirical evidence on the labor market effects of public health insurance
using evidence from China. In 2007, China launched a national public health insurance program, Urban Resident Basic Medical Insurance (URBMI), targeting residents in urban areas who were not insured by the pre-existing employment-based health insurance system. Using panel data from the China Health and Nutrition Survey 2004, 2006, 2009, and 2011, I employ an instrumental variable strategy that exploits the time variation in URBMI implementation at the city level to overcome self-selection issues. I find that URBMI did not have a significant average causal effect on employment for the sample as a whole. However, after the program was implemented, job lock declined, and job flexibility increased, especially among women, the less educated, and individuals with good health status. The results also suggest increased labor supply for unhealthy
workers, indicating a direct health improvement effect.hanghaiTech University

Keywords: Public health insurance, Labor supply, Job mobility, Informality, Urban China

Date Written: May, 2019

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