Financial incentives and delivery care: Evidence from the Safe Delivery Incentive Program in Nepal

Abstract

AbstractThis paper examines the effects of the Safe Delivery Incentive Program in Nepal, a cash transfer program that reduced the costs of childbirth in healthcare facilities. Women giving birth for the first, second, or third time (below‐cutoff) became eligible in 2005, and women giving birth for the fourth time or more (above‐cutoff) became eligible two years later. Using a difference‐in‐differences design, I find that below‐cutoff women in high Human Development Index (HDI) districts increased facility delivery by 8.8 percentage points. Despite larger cost reductions, below‐cutoff women in low HDI districts did not increase facility delivery but increased home delivery with skilled personnel by 4.8 percentage points. The program had no impact on above‐cutoff women, who become eligible 2 years into the program. I suggest that pre‐existing barriers such as poor infrastructure of roads and facilities, customs, liquidity constraints, and lack of program awareness limited the program's effectiveness.