Medical insurance benefits and labor decisions of middle-aged and elderly people: Evidence from rural China

Abstract

Studying the influence of expanded medical insurance coverage on the labor decisions of rural middle-aged and elderly individuals is advantageous in addressing the consequences of population aging on the labor market. This study utilizes the China Health and Retirement Longitudinal Study (CHARLS) from 2015 and 2018, employs the Difference-in-Differences (DID) approach to empirically investigate the effect of improved medical insurance benefits on the labor decisions of rural middle-aged and elderly individuals. The findings suggest that the increase in medical insurance benefits significantly raises the labor participation rate, labor force participation time, and labor migration among rural middle-aged and elderly individuals, while reducing their willingness for endless labor. Further analysis reveals that the increase of medical insurance benefits directly affects labor decisions by reducing the burden of medical expenses and indirectly influences labor decisions by affecting health conditions. The impact of increased medical insurance benefits on labor supply is more pronounced for the elderly and women compared to middle-aged individuals and men. Based on these findings, this study suggests the continuous improvement of medical insurance benefits for rural residents, the expansion of the scope of medical insurance coverage, and the gradual relaxation of participation restrictions in the medical insurance program.