Essays on the Role of Government Incentives in the Private Provision of Social Goods

The economic rationale for public intervention into private markets through price mechanisms is twofold: to correct market failures and to redistribute resources. Financial incentives are one such price mechanism. In this dissertation, I specifically address the role of financial incentives in providing social goods in two separate contexts: a redistributive policy that enables low income working families to access affordable childcare in the US and an experimental pay-for-performance intervention to improve population health outcomes in rural India. In the first two papers, I investigate the effects of government incentives for providing grandchild care on grandmothers’ short- and long-term outcomes. In the third paper, coauthored with Manoj Mohanan, Grant Miller, Katherine Donato, and Marcos Vera-Hernandez, we use an experimental framework to consider the the effects of financial incentives in improving maternal and child health outcomes in the Indian state of Karnataka.

Grandmothers provide a significant amount of childcare in the US, but little is known about how this informal, and often uncompensated, time transfer impacts their economic and health outcomes. The first two chapters of this dissertation address the impact of federally funded, state-level means-tested programs that compensate grandparent-provided childcare on the retirement security of older women, an economically vulnerable group of considerable policy interest. I use the variation in the availability and generosity of childcare subsidies to model the effect of government payments for grandchild care on grandmothers’ time use, income, earnings, interfamily transfers, and health outcomes. After establishing that more generous government payments induce grandmothers to provide more hours of childcare, I find that grandmothers adjust their behavior by reducing their formal labor supply and earnings. Grandmothers make up for lost earnings by claiming Social Security earlier, increasing their reliance on Supplemental Security Income (SSI) and reducing financial transfers to their children. While the policy does not appear to negatively impact grandmothers’ immediate economic well-being, there are significant costs to the state, in terms of both up-front costs for care payments and long-term costs as a result of grandmothers’ increased reliance on social insurance.

The final paper, The Role of Non-Cognitive Traits in Response to Financial Incentives: Evidence from a Randomized Control Trial of Obstetrics Care Providers in India, is coauthored with Manoj Mohanan, Grant Miller, Katherine Donato and Marcos Vera-Hernandez. We report the results from “Improving Maternal and Child Health in India: Evaluating Demand and Supply Side Strategies” (IMACHINE), a randomized controlled experiment designed to test the effectiveness of supply-side incentives for private obstetrics care providers in rural Karnataka, India. In particular, the experimental design compares two different types of incentives: (1) those based on the quality of inputs providers offer their patients (inputs contracts) and (2) those based on the reduction of incidence of four adverse maternal and neonatal health outcomes (outcomes contracts). Along with studying the relative effectiveness of the different financial incentives, we also investigate the role of provider characteristics, preferences, expectations and non-cognitive traits in mitigating the effects of incentive contracts.

We find that both contract types input incentive contracts reduce rates of post-partum hemorrhage, the leading cause of maternal mortality in India by about 20%. We also find some evidence of multitasking as output incentive contract providers reduce the level of postnatal newborn care received by their patients. We find that patient health improvements in response to both contract types are concentrated among higher trained providers. We find improvements in patient care to be concentrated among the lower trained providers. Contrary to our expectations, we also find improvements in patient health to be concentrated among the most risk averse providers, while more patient providers respond relatively little to the incentives, and these difference are most evident in the outputs contract arm. The results are opposite for patient care outcomes; risk averse providers have significantly lower rates of patient care and more patient providers provide higher quality care in response to the outputs contract. We find evidence that overconfidence among providers about their expectations about possible improvements reduces the effectiveness of both types of incentive contracts for improving both patient outcomes and patient care. Finally, we find no heterogeneous response based on non-cognitive traits.

Three Essays on the Effects of Donor Supplied Contraceptives on Fertility, Usage, and Attitudes

After the 2012 London Summit on Family Planning, there have been major strides in advancing the family planning agenda for low and middle-income countries worldwide. Much of the existing infrastructure and funding for family planning access is in the form of supplying free contraceptives to countries. While the average yearly value of donations since 2000 was over 170 million dollars for contraceptives procured for developing countries, an ongoing debate in the empirical literature is whether increases in contraceptive access and supply drive declines in fertility (UNFPA 2014).

This dissertation explores the fertility and behavioral effects of an increase in contraceptive supply donated to Zambia. Zambia, a high-fertility developing country, receives over 80 percent of its contraceptives from multilateral donors and aid agencies. Most contraceptives are donated and provided to women for free at government clinics (DELIVER 2015). I chose Zambia as a case study to measure the relationship between contraceptive supply and fertility because of two donor-driven events that led to an increase in both the quantity and frequency of contraceptives starting in 2008 (UNFPA 2014). Donations increased because donors and the Zambian government started a systematic method of forecasting contraceptive need on December 2007, and the Mexico City Policy was lifted in January 2009.

In Chapter 1, I investigate whether a large change in quantity and frequency of donated contraceptives affected fertility, using available data on contraceptive donations to Zambia, and birth records from the 2007 and 2013 Demographic and Health Surveys. I use a difference-in-difference framework to estimate the fertility effects of a supply chain improvement program that started in 2011, and was designed to ensure more regularity of contraceptive supply. The increase in total contraceptive supply after the Mexico City Policy was rescinded is associated with a 12 percent reduction in fertility relative to the before period, after controlling for demographic characteristics and time controls. There is evidence that a supply chain improvement program led to significant fertility declines for regions that received the program after the Mexico City Policy was rescinded.

In Chapter 2, I explore the effects of the large increase in donated contraceptives on modern contraceptive uptake. According to the 2007 and 2013 Demographic and Health Surveys, there was a dramatic increase in current use of injectables, implants, and IUDs. Simultaneously, declines occurred in usage of condoms, lactational amenorrhea method (LAM), and traditional methods. In this chapter, I estimate the effect of the increase in donations on uptake, composition of contraceptive usage, and usage of methods based on distance to contraceptive access points. The results show the post-2007 period is associated with an increase in usage of injectables and the pill among women living further away from access points.

In Chapter 3, I explore attitudes towards the contraceptive supply system, and identify areas for improvement, based on qualitative interviews with 14 experts and 61 Zambian users and non-users of contraceptives. The interviews uncover systemic barriers that prevent women from consistently accessing methods, and individual barriers that exacerbate the deficiencies in supply chain procedures. I find that 39 out of 61 women interviewed, both users and non-users, had personal experiences with stock out. The qualitative results suggest that the increase in contraceptives brought to the country after 2007 may have not contributed to as large of a decline in fertility because of bottlenecks in the supply chain, and problems in maintaining stock levels at clinics. I end the chapter with a series of four recommendations for improvements in the supply chain going forward, in light of recent commitments by the Zambian government during the 2012 London Summit on Family Planning.