# **1 Introduction**

Large and unpredictable medical expenditures expose uninsured households to substantial financial risk. Households may sell financial assets or incur debt to pay for health care without compromising consumption levels. In poorer economies, however, limited wealth and access to financial instruments may make it difficult to smooth consumption over shocks. Accordingly, a key objective of public health insurance schemes in those settings has been to secure the subsistence of vulnerable populations. Consistent with this, the prevention of negative shocks to food consumption has been traditionally considered the social value of insurance (Townsend, 1994).

This may be an overly narrow perspective because uninsured households facing health shocks in developing countries may employ strategies to protect minimum food consumption levels that can be similarly detrimental in the short term and even more so in the medium to long term (Chetty & Looney, 2006). For instance, in order to generate additional income that allows (partially) covering catastrophic medical expenditures, households may take children out of school and put them to work with likely negative effects on their well-being later in life.<sup>1</sup> In fact, two studies of health insurance schemes have documented effects on child labor (Landmann & Fr ̈olich, 2015; Chakrabarty, 2012) and, thus, arguably illustrated their social value. However, the studied schemes were small programs run by non-profit organizations. Policy makers are now interested in whether the same result applies to large-scale public insurance schemes. This is of particular importance as there are numerous examples of small programs that were scaled up by governments, but the size of the measured treatment effect diminished substantially (Al-Ubaydli, List, LoRe, & Suskind, 2017).<sup>2</sup> This paper adds to the literature by presenting the first causal estimates of the effects of a country-wide health insurance scheme on the incidence of child labor.<sup>3</sup> As a secondary contribution, we examine the effects on additional costly risk coping strategies such as the 1See Heady (2003), Borga (2019), and Mussa et al. (2018) for the effects of child labor on skill and human capital formation. Dumas (2012) and Keane et al. (2018) show detrimental effects of child labor on cognitive development. Also, children who work early on were found to have lower wages (Emerson & Souza, 2011; Posso, 2017) and a worse health status (Beegle et al., 2009; Sturrock & Hodes, 2016) later in life. Of course, it is not to question that food consumption profiles of children can be important determinants of their future health and education (e.g., Christian & Dillon, 2018). 2This is explained by various factors including increased administrative complexity, different implementation of the program at scale, and altered composition of program participants (Al-Ubaydli, List, & Suskind, 2017).

> 3Evidence from country-wide insurance schemes was highlighted as an important knowledge gap in the field of research on child labor (Dammert et al., 2018). The public scheme examined in this paper is indeed remarkably different from the schemes that were studied by Landmann & Fr ̈olich (2015) and Chakrabarty (2012). For example, it was not restricted to micro-finance clients but available to the general public, the number of insured people is several thousand times larger, and children as well as the elderly were automatically covered.

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