Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322346 
Year of Publication: 
2025
Series/Report no.: 
Working Papers No. 2025-03
Publisher: 
Banco de México, Ciudad de México
Abstract: 
We analyze the effect of adverse health shocks on households' expenditure shares in different good categories using a fixed-effects approach and a structural approach based on microeconomic theory. We find that, on average, households substitute health and food expenditure in response to adverse health shocks. Our estimates unveil substantial heterogeneity in this trade-off mediated by access to social protection, job contract type, and urban or rural location. Households from rural areas - where household heads are more likely to hold informal jobs and lack access to safety nets - engage in more substitution of food expenditure for health expenditure than others. Our findings suggest that access to formal employment and a higher quality of local institutions can help mitigate the negative consequences of health shocks for households
Subjects: 
Health shocks
household expenditure
informal labor
urban-rural
JEL: 
D12
I15
J46
Document Type: 
Working Paper
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