Evaluating the effects of optimally distributed public programs: child health and family planning interventions
Abstract
This paper develops and tests an optimizing model determining the distribution of family planning and health subsidies across heterogeneous households and assesses the biases in cross-area estimates of the health effects of such subsidies due to public resource optimization. The model incorporates both health externalities and the endogenous response of the size of the recipient population to program subsidies. Longitudinal data describing child health and publicly provided family planning and health programs in 20 barrios in Laguna Province in the Philippines are used to estimate the effects of such programs on child health and the relationships between the distribution of the programs and preprogram health levels. The impact of a program on a particular childs health status is viewed as dependent upon the childs length of exposure to the program. A basic feature of the model is the presence of health externalities which is shown to be sufficient along with plausible features of household behavior to make selective subsidization of fertility control (either alone or in combination with health investment subsidies) Pareto efficient. The model suggests that subsidization of fertility control is likely to be Pareto efficient in the presence of health or human capital externalities when human capital and family size are gross substitutes and/or when any per child human capital subsidies may substitute for direct subsidies to health investment and an equalizing distribution of the subsidies (the highest family planning subsidies to the lowest health recipient households) is efficient. When both health and family planning subsidies are used fertility control subsidies minimize the subsidy burden for donors and are highest when total subsidy expenditures per child are greatest.
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