Economic Consequences of Ill-Health in Rural Ethiopia

The authors of this article use three years of household panel data to analyse the effects of ill-health on household economic outcomes in rural Ethiopia. They examine the immediate effects of various ill-health measures on health expenditure and labour supply, the subsequent coping responses, and finally the effect on income and consumption. They find evidence of substantial economic risk in terms of increased health expenditure and reduced agricultural productivity. Households are able to smooth consumption by resorting to intra-household labour substitution, borrowing and depleting assets. However, maintaining current consumption through borrowing and depletion of assets is unlikely to be sustainable and displays the need for health financing reforms and safety nets that reduce the financial consequences of ill-health.

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This article appeared open access in Health Systems & Reform, Volume 7, 2021 - Issue 2: Equity and Health Systems: Special Issue in Honor of Adam Wagstaff.