Does a Ban on Informal Health Providers Save Lives

Informal health providers ranging from drug vendors to traditional healers account for a large fraction of health care consumption in developing countries. They are, however, largely unlicensed and unregulated leading to concern that they provide ineffective and, in some cases, even harmful care. A new and controversial policy tool that has been proposed to alter household health seeking behavior is an outright ban on these informal providers. The theoretical effects of such a ban are ambiguous. In this paper, we study the effect of a ban on informal (traditional) birth attendants imposed by the Malawi government in 2007. To measure the effect of the ban, we exploit variation across time and space in the intensity of exposure to the ban i.e., a difference-in-difference strategy. Our most conservative estimates suggest that the ban decreased use of traditional attendants by about 15 percentage points. Consistent with policy objectives, the ban shifted births to the formal sector, increasing use of formal sector providers by about 10 percentage points. The rest of the decrease is accounted for by an increase in the use of other informal substitutes, primarily relative-attended births. Despite the rather large shift from the informal to the formal sector, we find no evidence of a reduction in newborn deaths. This result is consistent with recent studies that argue that increasing the use of formal sector providers is, by itself, unlikely to result in significant improvements in health outcomes.