Health insurance and self-employment transitions in Vietnam: A multinomial analysis
Nga Leopold, Wim Groot, Sonila Tomini & Florian Tomini
#2018-039
This paper has been republished as #2019-008
Health insurance can have important effects on self-employment and self-
employment transitions. However, there is a literature gap on the
relationship between health insurance and self-employment in low and
middle income countries, especially in the context of the rapid
expansion of health insurance in these countries. This paper examines
this relationship in Vietnam with a focus on the comparison between the
voluntary scheme for the informal sector (mostly self-employed workers)
and the compulsory insurance for the formal sector (mostly wage
workers). We employ a Multinomial Logit Model on a panel from the
Vietnamese Household Living Standards Surveys 2010-2014 to investigate
the association between health insurance and self-employment entry and
exit over time. We show that those with compulsory health insurance in
Vietnam, the formal workers, do not have the incentive to start a
business compared to those having voluntary insurance. This effect holds
true over time in 2012 and 2014. The effect is partly explained by the
better enforcement of the compulsory health insurance scheme in Vietnam,
making staying out of self-employment (often informal self-employment) a
preferred choice. Regarding the effect of health insurance on self-
employment exit, we do not find any conclusive evidence on this matter.
The rigidity of the economy is highlighted, suggesting important policy
implications in the areas of health and labour policies in Vietnam.
JEL Classification: I13, J22
Keywords: health insurance, self-employment, Vietnam self-employment
entry, self-employment exit