Do Health Care Providers Respond to Demand-Side Incentives? Evidence from Indonesia

Margaret Triyana, University of Chicago

This paper exploits the sub-district randomization of Indonesia's household Conditional Cash Transfer (CCT) program to estimate the program effects on the local healthcare market. The CCT program generates a demand shock in the healthcare market as measured by increased use of midwives, the main delivery attendant, for childbirth assistance. The program is associated with a 10% increase in the number of midwives and a 10% increase in delivery fees charged by midwives in treated sub-districts. Among poor households that receive the cash transfer, the program is associated with a 45% increase in the use of midwives for delivery assistance. Consequently, participating households experience improvements in prenatal care quality and an increase in delivery fees paid to midwives.