Year of Publication: 2012

Abstract: This paper exploits the sub-district randomization of Indonesia’s household Conditional Cash Transfer (CCT) program to analyze how the program aects the local healthcare market. The CCT program generates a demand shock in the healthcare market as measured by increased use of midwives, who are the main delivery attendants. 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 an increase in delivery fees paid to midwives. 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. In addition,participants experience higher quality of prenatal care. However, this is driven by increased utilization among participants, instead of improvements in the quality of care provided by midwives.