Health, Enterprise, and Labor Complementarity in the Household

Abstract

We study the role of household enterprise as a coping mechanism after health shocks. Using variation in the cost of traveling to formal sector health facilities to predict recovery from acute illness in Tanzania, we show that individuals with prolonged illness switch from farm labor to enterprise activity. This response occurs along both the extensive (entry) and intensive (capital stock and labor supply) margins. Family members who are not ill exhibit exactly the same pattern of responses. Deriving a simple extension to the canonical agricultural household model, we show that our results suggest complementarities in household labor.

Return to Treatment in the Formal Health Care Sector: Evidence from Tanzania

“…In related work (Adhvaryu and Anant Nyshadham 2012, 2013), we estimate the schooling and labor supply impacts of formal sector care access for children with fever, and examine how households’ self-employment patterns change in response to treatment in the formal health care sector. Given the potential gains to improved access, future research should rigorously test the impacts of policy solutions that improve access to care.…”

Small Firm Death in Developing Countries

“…People with higher likelihoods of illness may also self-select into running household enterprises rather than more brawn-based activities such as farming(Adhvaryu and Nyshadham, 2017).…”

Intra-household labor allocation in colonial Nigeria

“…We believe, however, that our work has broader relevance. In finding that illness shocks are compounded by labor complementarities (Adhvaryu and Nyshadham, 2014), in stressing that household bargaining considerations can produce inefficient outcomes (Jakiela and Ozier, 2015), and in highlighting complexities in the dynamics of child labor (Basu, 2006), we show that the considerations motivating the households in our sample parallel those facing many present-day households operating both in Africa and throughout the developing world. Notes: *** Significant at 1%, ** Significant at 5%, * Significant at 10%.…”

“…First, we use illness of others in the household. Because illness imposes time costs on individuals, we can follow the approach of Adhvaryu and Nyshadham (2014), who argue that, if labor within the household were substitutable, the labor inputs of others in the household would rise to compensate. Since we find only limited evidence of substitution, illness has a larger adverse effect on the household's productive capacity than if labor were less complementary.…”