Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/258942 
Year of Publication: 
2020
Series/Report no.: 
CEBI Working Paper Series No. 28/20
Publisher: 
University of Copenhagen, Department of Economics, Center for Economic Behavior and Inequality (CEBI), Copenhagen
Abstract: 
Are low-income individuals relying on government transfers liquidity constrained by the end of the month to a degree that they postpone medical treatment? I investigate this question using Danish administrative data comprising the universe of welfare recipients and the filling of all prescription drugs. I find that on transfer income payday, recipients have a 52% increase in the propensity to fill a prescription. By separating prophylaxis drugs used to treat chronic conditions, where the patient can anticipate the need to fill the prescription, e.g. cholesterol-lowering statins, I find an increase of up to 99% increase on payday. Even for drugs used to treat acute conditions, where timely treatment is essential, I find a 22% increase on payday for antibiotics and a 5-8% decrease in the four days preceding payday. Lastly, exploiting the difference in day the doctor write the prescription and the day the patient fill it, I show that liquidity constraints is the key operating mechanism for postponing antibiotic treatment.
Subjects: 
health behavior
health insurance
health and inequality
prescription drugs
payday
JEL: 
I12
I13
I14
Document Type: 
Working Paper

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