Urbanization and Health Expenditure: An Empirical Investigation from Households in Vietnam

Abstract

This study examines the effects of urbanization on household health expenditure. Using a unique bi-annually household-level dataset from 2012–2016 from Vietnam, we obtain key findings as follows. To mitigate possible endogeneity concerns, we utilize a two-stage least squares regression (2SLS) approach, employing the development of information and communication (ICT) infrastructure at the province level as an instrumental variable (IV). The key findings can be summarized as follows. First, urbanization significantly reduces Vietnamese households’ inpatient and outpatient health expenses. Second, the self-treatment expenses of households increase as the process of urbanization advances. In addition, we perform various robustness checks, encompassing different measures of urbanization, the use of lag of urbanization as an additional IV, and the plausible exogenous IV. The outcomes derived from these rigorous sensitivity analyses substantiate the reliability and consistency of our key results. Finally, we propose different ways to explain these results, including health insurance expenses and household income.