Marginal Benefit Incidence of Public Health Spending: Evidence from Indonesian sub-national data

Ioanna Kruse, Menno Pradhan, Robert Sparrow*

*Corresponding author for this work

Research output: Working paperAcademic

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We1 examine the marginal effects of decentralized public health spending by
incorporating estimates of behavioural responses to changes in public health
spending through benefit incidence analysis. The analysis is based on a panel
dataset of 207 Indonesian districts over a 4-year period from 2001 to 2004. We
show that district-level public health spending is largely driven by central
government transfers, with an elasticity of public health spending with respect
to district revenues of around 0.9. We find a positive effect of public health
spending on utilization of outpatient care in the public sector for the poorest
two quartiles. We find no evidence that public expenditures crowd out
utilization of private services or household health spending. Our analysis
suggests that increased public health spending improves targeting to the poor,
as behavioural changes in public health care utilization are pro-poor.
Nonetheless, most of the benefits of the additional spending accrued to
existing users of services, as initial utilization shares outweigh the behavioural
Original languageEnglish
Place of PublicationDen Haag
PublisherInternational Institute of Social Studies (ISS)
Number of pages37
Publication statusPublished - Dec 2009

Publication series

SeriesISS working papers. General series

Bibliographical note

Robert Sparrow gratefully acknowledges financial support from EU-FP7 grant 223166

JEL: H72, H75, I18


  • ISS Working Paper-General Series


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