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Breaking the Perverse Health-debt Cycle in Sri Lanka: Policy Options
Institution:1. Department of Management, Monash Business School, Monash University, Menzies Building, Level 11, Clayton Campus, Victoria 3800, Australia;2. Department of Public Administration, University of Sri Jayewardenepura, Gangodawila-Nugegoda, Sri Lanka;3. Department of Management, Monash Business School, Monash University, Caulfield Campus, Caulfield East, Victoria 3145, Australia;1. Department of Economics, Obafemi Awolowo University, Ile-Ife, Osun State, Nigeria;2. Department of Economics, University of Lagos, Lagos, Nigeria;1. I. Department of Internal Medicine, University Medical-Center Hamburg-Eppendorf, Hamburg, Germany;2. Institute for Interdisciplinary Medicine at the Asklepios Klinik St. Georg, Hamburg, Germany;3. German Center for Infection Research (DZIF), Hamburg Site, Germany;1. Department MEMOTEF, Sapienza University of Rome, Italy;2. Department of Economics and Law, Sapienza University of Rome, Italy;3. Council of Experts, Ministry of Economy and Finance, Italy;4. School of European Political Economy, Luiss, Rome, Italy;5. Department of Treasury, Ministry of Economy and Finance, Italy;1. Centre for Research on Health Economics, Social and Health Care Management, LIUC – Carlo Cattaneo University, Castellanza, Italy;2. School of Public Health, Faculty of Health Sciences, University of the Witwatersrand, Johannesburg, South Africa;3. Infectious Diseases Department, ASST Valle Olona, Busto Arsizio, Italy;4. Department of Infectious Diseases, Fatebebefratelli Sacco Hospital, Milan, Italy;5. School of Clinical Medicine, Faculty of Health Science, University of the Witwatersrand, Johannesburg, South Africa
Abstract:This paper proposes a finite mixture model to examine how health adversities influence indebtedness of Sri Lankan households. After accounting for unobserved heterogeneity, our empirical analysis reveals that households headed by ill-health members and those with hospitalization are inevitably more vulnerable to indebtedness. The ill-health status of other working-age members also creates milder effects on household indebtedness. We confirm that the health-debt cycle is more severe for urban households, compared to their rural counterparts. The study is testimony to re-emphasizing the role of government in providing much-needed financial protection to vulnerable households and implementing differentiated-policy packages for urban and rural sectors in order to effectively break the health-debt cycle.
Keywords:Ill-health  Household surveys  Indebtedness  Unobserved-heterogeneity  Living sector  C54  C55  I12  I31
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