Health Shocks and Unbalanced Growth of Medical Resources: Evidence From the SARS Epidemic in China

Since the outbreak of the SARS epidemic in 2003, the Chinese government has increased inputs to bolster the health care system. However, the COVID-19 pandemic has exposed the geographic maldistribution of health resources in China. We examine the spatial and temporal variation of the SARS epidemic using a difference-in-differences strategy. Our empirical results show that, compared with cities without SARS case reports, exogenous health shocks significantly increased the affected cities' medical resources supply. We provide multiple robustness tests to examine the validity of the main findings. Further study shows that the mechanism is because the SARS event increased the financial autonomy of the epidemic-affected cities, thus providing an incentive for local governments to increase health resources. Meanwhile, health shocks have little influence on the regions with only imported cases than the infected area. These findings provide a possible explanation for the inequality in the distribution of health resources.