Working Paper: CEPR ID: DP14755
Authors: Nancy Qian; Erika Deserranno
Abstract: We document that in poor rural communities where government workers provide basic health services, the entry of an NGO that aims to provide similar services reduces the supply of government workers and total services. This is consistent with the NGO providing the combination of higher pay and stronger incentives for commercial activities. The decline in health services is most pronounced in villages where the NGO hires the government worker, and is accompanied by an increase in infant mortality. In villages without any health worker beforehand, NGO entry unambiguously increases health services and reduces infant mortality.
Keywords: Foreign Aid; Aid Effectiveness
JEL Codes: O1; O2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| NGO pays workers more than the government (L31) | incentivizes workers to switch (J62) |
| NGO workers incentivized towards commercial activities (L31) | detracts from health service delivery (I19) |
| NGO entry (L31) | reduction in the supply of government health workers (J45) |
| NGO entry (L31) | 25 percentage-point decrease in the probability of households receiving care from government health workers (I14) |
| NGO entry (L31) | 12 percentage-point decrease in the likelihood of receiving care from any health worker (I14) |
| NGO entry (L31) | increase in infant mortality rates (J13) |
| NGO hires away existing government workers (L33) | reduction in total health services in villages with existing government workers (I14) |