To Be and To Be Better: Financing Medical Care and Education in Rural China

1. Education Medical care Figure. Proportion of the expenditures to total living expenditure of Chinese rural households(%) To Be and To Be Better: Financing Medical Care and Education in Rural China Huashu Wang, Henk A.J. Moll, and Shenggen Fan Problem statement and Objective Financing predictable and unexpected expenditures is a major concern of rural households with irregular incomes and related with financial shocks resulting in their decline into poverty. In this study we compare the actual financing of Education and Medical care by rural households to gain insight into their capability to invest and deal with shocks. Hypothesis Predictable (education) expenditures are financed internally through savings whereas unexpected (medical) expenditures are financed externally through loans • Explorative questions • role of formal lending • role of other ways of financing • Methodology • Data of total households in three villages in Guizhou, South-West China (n=790). • Statistics analyses (both parametric and non-parametric) are used to test the Hypothesis. Incomes: low and unpredictable Finding 1 Financing education mainly through savings; financing medical care mainly through informal loans, some savings and selling assets.(Hypothesis accepted) Finding 2 Formal loans play no role, even for the richest group of households. Finding 3 Government and donor support only for primary education. Substantial expenditures for secondary education and medical care may endanger livelihood rural households Investing in education In need of medical care • Conclusions • Formal financial services, both savings and credit services, require more attention to enable households of all income categories to invest in education and enterprises. • Health insurance will increase welfare in rural China, especially for the lower income groups who now need to sell productive assets to finance medical care. Contact: ec.hswang@gzu.edu.cn