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

This paper exploits the sub-district randomization of Indonesia's household Conditional Cash Transfer (CCT) program to analyze how the program a ects the local health care market. The CCT program is associated with increased use of midwives as the main delivery attendants. The program is associated with a 10% increase in both the number of midwives and the delivery fees charged by midwives in treated communities. The program participants report receiving a higher quality of prenatal care. This is due, however, not to improvements in quality of care in the market, but to increased utilization among program participants. JEL codes: I1, I3, O1 ∗Email: [email protected]. I am especially grateful to Robert Lalonde, Dan Black, Kerwin Charles, Ioana Marinescu, and Rema Hanna for their guidance and numerous helpful discussions. I also thank Ben Olken, Alicia Menendez, Marianne Bertrand, Harold Alderman, Je Grogger, Lily Hoo, Yulia Herawati, Lina Marliani, Julia Tobias, MatthewWai-poi, Jessica Pan, Alice Chen, Yi-Lin Tsai, Maria Rosales, and seminar participants at the University of Chicago and Harvard Kennedy School for valuable suggestions. Research support from the Hewlett Foundation/IIE Dissertation Fellowship and the Harvard Kennedy School Indonesia Program is gratefully acknowledged.