Paying Informally in the Albanian Health Care Sector: A Two-Tiered Stochastic Frontier Bargaining Model

The 'watch dog' role of the media, the impact of migration processes, health care access for children in developing countries, mitigation of the effects of Global Warming are typical examples of governance issues – issues to be tackled at the base; issues to be solved by creating and implementing effective policy. students to pave the road for innovative policy developments in Europe and the world today. Our master's and PhD programmes train you in analysing, monitoring and evaluating public policy in order to strengthen democratic governance in domestic and international organisations. The School carefully crafts its training activities to give national and international organisations, scholars and professionals the tools needed to harness the strengths of changing organisations and solve today' s challenges, and more importantly, the ones of tomorrow. Acknowledgement: The study is part of Project ASSPRO CEE 2007 (Grant Agreement no. 217431) funded by the European Commission under the 7 th Framework Programme, Theme 8 Socioeconomic Sciences and Humanities. The content of the publication is the sole responsibility of the authors and it in no way represents the views of the Commission or its services. Abstract This paper looks at informal payments in the health care sector in Albania and the bargaining power of patients and medical staff. We develop a two-tiered stochastic frontier model to measure the effect of bargaining power of medical staff and patients on the extent of informal payments. We use data from the Albania Living Standards Measurement Survey 2005 and calculate patients' maximum willingness to pay and medical staff' expected payments for both outpatient and inpatient visits. The results show that medical staff have consistently more bargaining power than patients, while patients and medical staff bargain more in outpatient than in inpatient care. Higher education, difficulty to pay for health care, and location of hospital increase the bargaining power of patients, while type of illness and location of hospital increase the bargaining power of medical staff.