In terms of impacts of health shocks on household outcomes, it is clear that the poor health is associated with various negative effects on the economic and non- economic side (O'Donnell et al, 2005; Wagstaff, 2007; Alam & Mahal, 2014).
Above section presents that the negative effects of shocks such as the lower income and unbalance labor supply, can be more likely to increase child labor. Therefore, this section will highlight a deeper insight on the impacts of health shocks on households in whole, with aiming to understand fulfill aspects in the health shock’s consequence and coping mechanisms to move forward the linkage of the child labor and health shocks in the next section.
Health shocks defined as negative events which relate to the health problem of family members including the death of family members and the illness or injury of those (Alam & Mahal, 2014). Some researchers indicate that a health event which categories
"shock" has to create strong negative impacts. For examples, "shock" has to include the death of adults or catastrophic treatment illness such as terminally ill, fatal diseases and incidents (Bandara et al, 2015). However, it is not denied that when any family member gets sick, even just the mild illness, this also forces people to spend more time for looking after each other or work more to substitute for illness individuals. Therefore, children will probably be assigned one or several jobs and the fact, they might spend
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more time to work.
Actually, it is not surprising that there are a lot of previous papers studying the impacts of health shock on household outcomes with large combinatorial aspects. Alam
and Mahal (2014) show a study for reviewing the empirical literature about economic impacts of health shocks in low - and middle-income countries (LMICs) with the household level. Following this paper, health shocks can impact on household through (1) out-of-pocket (OOP) health payments, measures of catastrophic spending and impoverishment; (2) household labor supply and household income; (3) non-medical expenditure. Heath shocks are measured by several indicators, for example, parental death, adults death, illness or death of member family, the measure of disability, change in self- reported health, the specific illness (e.g, cancer, HIV).
The main results of empirical studies show that health shocks in LMICs can are likely to higher OOP health payments which against the smoothing consumption of households, and this leads families to impoverishments, especially for poor families. For distance, with poor families, the share of OOP health payment in the total income is larger than richer families, and therefore, poor families occur more serious effects.
The more public services provided to patients or the health insurance program can support for poor households covering some expenses when they have to go the hospital, and this may tend to lower OOP health expenditure. For Vietnam data, Van Minh et al (2012) find an increase of 2.5% in poverty if households meet health risks. Also, the result of Wagstaff (2007) argues that the death of adults makes a rise of the medical expenditure in the last month in Vietnam at around 27%.
Health risks can be the cause of the time-work loss of family members as well as employment income reduction. When households face a death or illness of any family member, this can make their labor supply unbalanced, especially for adult mortality. The decreasing labor force results in losing people, the low productivity of illness individuals and other members sent to caregivers, and then, drop the wage, farming returns or business earnings. In most case studies, the death of adults leads to a lower labor supply in the family. Beegle (2005) studies for Tanzania finding that there are 66 – 75%
of men's wage within 6 months are decreased when families experience the death of an adult at age of 15
– 50 due to AIDS. Additionally, the death of a household member pushes a decrease of hour worked by over 8.63% in the past week in Bangladesh. Using data in Vietnam, Bales (2013) measure the health shock as the variable of adult member bedridden due to illness for 14 days or more in 12 months, and find that health risks lead a lower annual workday by 7.7%. Results from a study of Wagstaff (2007) show that if Vietnamese
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households experience the death of working age member in urban areas in two years, lead to drop by
26% of the total income and 36.5% of earned income. Bales (2013) uses the VHLSS data to research impacts of severe illness, adult death and the onset of disability on household welfare in Vietnam. Results indicate reduce in labor supply as well as non-farm employment income. Although some papers argue the effects of health risks on household income are negative, while others do not find the connection between them.
Results are able to depend on the measures of health shocks as well as kinds of the labor force employed. For examples, Yomano & Yayne (2014) indicate an insignificant relation between any adults death and off-farm income in all, while the result shows a significant decrease in the death of the male household head. The ambiguous effect also presents in results of Khan (2010).
Other health shock effects are on non-medical consumption. Using data from Vietnam, Wagstaff (2007) finds the negative effect on food expenditure. However, Bales (2013) employs the VHLSS data and find a reduction in labor supply as well as non-farm employment income while the non-medical payment is not impacted by health risks.
Another conclusion, households do not use all of the consumption insurance to cope with health shocks when they can access the credit market. Household characteristics also main factors affecting consumption smoothing.
In sum up, health shocks can make negative effects on the household’s consequence such as income reduction, out of pocket health expenditure, unbalanced labor supply. It takes into account that child labor also is existence as the result of health shocks. The next section will present the household behavior to coping with health shocks. From that, it can help to understand more detail about the decision-making process for child labor latterly.