Health insurance and self-employment transitions in Vietnam

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 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 Probit model with selection 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. We show that those with compulsory health insurance in Vietnam, the formal workers, are 10 percentage points less likely to enter self-employment compared to those having voluntary insurance. Regarding self-employment exit, people with compulsory insurance are more likely to exit self-employment compared to those covered by voluntary insurance. However, the effect size is relatively small.

JEL Classification: I13, J22

Keywords: health insurance, self-employment, Vietnam, self-employment entry, self-employment exit