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Do households value access to free health insurance when making labor supply decisions? We answer this question using the introduction of universal health insurance in Mexico, the Seguro Popular (SP), in 2002. The SP targeted individuals not covered by Social Security and broke the link between access to health care and job contract. We start by using the rollout of SP across municipalities in a differences-indifferences approach, and find an increase in informality of 4% among low-educated families with children. We then develop and estimate a household search model that incorporates the pre-reform valuation of formal sector amenities relative to the alternatives (informal sector and non-employment) and the value of SP. The estimated value of the health insurance coverage provided by SP is below the government’s cost of the program, and the corresponding utility gain is, at most, 0.56 per each peso spent.
Authors
Research Fellow University College London
Gabriella is a Research Fellow of the IFS and a Professor of Economics in the Department of Economics and in the Department of Social Science at UCL.
Renata Narita
Research Associate University of Bergen
Rita is an IFS Research Associate, an Associate Professor at the University of Bergen and a Research Associate at the Uppsala University.
Working Paper details
- DOI
- 10.1920/wp.ifs.2018.2018
- Publisher
- The IFS
Suggested citation
G, Conti and R, Ginja and R, Narita. (2018). The value of health insurance: a household job search approach. London: The IFS. Available at: https://ifs.org.uk/publications/value-health-insurance-household-job-search-approach (accessed: 18 April 2024).
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