Wage changes and women’s health spending: evidence from India

In this paper, we explore the little studied role of gender-based tastes and preferences in the empirical relationship between income and demand for health care. Based on a large body of evidence which suggests that the gender identity of the recipient of money can significantly influence allocation of resources within the household, we conjecture that an increase in women’s income may have interesting and unconventional effects on demand for healthcare. Using data from a high-frequency large nationally representative household survey in India, we exploit exogenous variation in women’s take-home salary, generated by a change in the mandated rates of contribution to the employees’ provident fund, to estimate impacts on health care spending. We find that an unanticipated income shock is associated with a decrease in overall spending on healthcare in female led households even after controlling for improved health outcomes for women, health-status, healthcare utilization at the intensive margin (i.e. hospital visits to seek treatment). Our results suggest that healthcare spending by women in India and the global south is guided by dynamic preferences and social norms.