Effect of Major Illness Insurance on Vulnerability to Poverty: Evidence From China

Disease is the primary cause of poverty in China. Health insurance is an essential mechanism for managing health risks and addressing the risk of financial loss. Using data from the China Family Panel Studies (CFPS) waves from 2010 to 2016, this study develops a random forest method to assess households' vulnerability to poverty and then examines the impact of major illness insurance on vulnerability to poverty by focusing on the rollout period of a major illness insurance scheme. The research also examines the impact of increased major illness insurance coverage on poverty reduction by focusing on the change from low- to high-coverage health insurance. The findings indicate that major illness insurance and improvements in the degree of coverage significantly reduce vulnerability to poverty. In addition, major illness insurance is found to alleviate the vicious cycle of poverty and disease through the mechanism of increasing household income, and its effect has strengthened over time. Compared to other poverty reduction policies, major illness insurance has a greater influence on poverty alleviation.

Digital financial inclusion and vulnerability to poverty: evidence from Chinese rural households

PurposeDigital finance has the transformative power to realise financial inclusion. However, evidence on the relationship between digital finance and poverty reduction remains limited. This study examines the mitigating effects of digital financial inclusion (DFI) on vulnerability to poverty in rural China, explores potential mechanisms at the micro-level, and investigates the external conditions for DFI to validate these effects.Design/methodology/approachRural household data from the China Labour Force Dynamics Survey and the regional DFI index compiled by Peking University are used. The probit and mediation effect models are employed to assess the impacts of the DFI on vulnerability to poverty and explore its mechanisms, with an appropriate instrumental variable to mitigate potential endogeneity.FindingsDFI can mitigate vulnerability to poverty in Chinese rural households. Specifically, both sub-indices – coverage breadth and depth of use – have a significant effect. Further analyses based on the mediation model show that improving agricultural productivity, stimulating entrepreneurial activities and promoting non-agricultural employment are the core mechanisms for alleviating poverty vulnerability. Heterogeneity analysis shows that DFI is pro-poor and benefits those who lack economic opportunities. Moreover, adequate endowment in rural households, such as production and human capital, is an external condition for digital finance to mitigate vulnerability to poverty.Originality/valueThis study is among the first to examine the vulnerability-mitigation effects from the perspective of digital finance development, relying on data from a large-scale, nationwide household survey and the regional DFI index. It also checks for the mechanisms and heterogeneity of the effects, which prove the effects can help balance efficiency and equity.

Vulnerability To Poverty: A Survey

There has been no consensus over the concept and measurement ofvulnerability to poverty (VP). Many scholars bring in different perspectives todiscuss various conceptual and measurement issues. This paper summarizes theavailable economic literature on the definitions and measurements of VP. Despitea lack of agreement, the concept of VP essentially captures the dynamic aspects ofpoverty, which are extremely important for formulating appropriate and effectivepoverty alleviation policies. This paper discusses the three basic approaches formeasuring VP. Further, the data-related issues are also discussed. Then the paperreviews previous studies on the vulnerability estimation for different countries andhighlights the relative importance of various shocks in determining vulnerability.Finally, the paper ends by raising a number of policy-related issues.

Towards Dynamic Assessment of Determinants of Household Vulnerability to Poverty in Tanzania

The paper examines the determinants of vulnerability to expected poverty in Tanzania. Following Landau et al. (2012), Chaudhuri (2000) and Chaudhuri et al. (2003) on estimating Vulnerability to Expected Poverty (VEP), the paper uses a three waves of Tanzania National Panel Survey Data for Tanzania collected between 2008/2009, 2010/2011 and 2012/2013 to find that being employed in agriculture, residing in rural area and household size turns out to be significantly more likely to be poor in the future, at a given consumption level and in all cross-section combination. It also appeared that most of the variables were statistically insignificant at influencing the conditional variance of future consumption across household characteristics. Lastly, nearly 39.42% and 59.49% of households who were poor in 2008 turned out to be less vulnerable in 2010 and 2012 respectively and the rest turned out to be high vulnerable. Thus, consumption stabilization strategies are likely to be influential if they target families whose household head is aging.

Correction: Health shocks and vulnerability to poverty in Congo

A Correction to this paper has been published: https://doi.org/10.1057/s41599-021-00728-7

Household Social Expenditure in Ghana: Examining the Ex-Post Effects and Vulnerability to Poverty

We estimate the effect of household social expenditure on vulnerability to poverty using the four latest cross-sectional waves of Ghana Living Standard Survey (GLSS) from 1999 to 2017. Using a 3-Stage Least Square and Quantile Regression, our results show a widening consumption ex-post welfare gap between the poorest households and the non-poor households in a per-dollar social expenditure. Further, we estimate the probability of an ex-ante poverty using vulnerability to expected poverty. The results, however, indicate that regardless of poverty status, household vulnerability to poverty increased consistently between 1999 and 2017, and the very poor households showing the severest vulnerability. Hence, it is concluded that social expenditure increases the chances of a poor household falling into chronic poverty a non-poor household into transient poverty in the future.