Abstract
Health demand of Grossman Model recognizes three determinant factors in estimation model such as wage, education, and age. This study intends to examine the role of wage on health demand using measurement of total sick days and that of health days as measurement for health demand applying Econometrics Model in the form of Ordinary Least Squares (OLS) Technique. It employed household data from National Social Economy Survey Panel containing reports on the two areas examined among respondents in urban area. We found that the number of respondents who were ill was 6.642 and those who were not was 9.895. We also found that increase on wage reduced sick day total among working class families but not for middle class families, and it also triggered health time for both middle-working class families. Low Elasticity Coefficient indicated inelastic health demand which needs one-fold wage increase to improve one percent of health demand. Such inelasticity in demand can increase the price of medical services in long term and is potential for health stock disparity for the people. To avoid this, health insurance is needed to cover the people in order to improve health time of the people.
Highlights
Physical and cognitive improvement for the people indicates the important role of health in economy growth in order to be able to use better production technology
In the period of 1997-2009 in Indonesia, health expense per capita tended to increase followed by the proportion of people who looked for traditional medicine exceeded increase in the proportion of people who suffered from sickness
The increase of health demand because of an increase in wage is limited among household groups with low education level
Summary
Physical and cognitive improvement for the people indicates the important role of health in economy growth in order to be able to use better production technology. In the period of 1997-2009 in Indonesia, health expense per capita tended to increase followed by the proportion of people who looked for traditional medicine exceeded increase in the proportion of people who suffered from sickness. This has pushed the people to believe that traditional medicine is an alternative for health care and an indication of health demand issue [6]. In Indonesian society, traditional medicine plays an important role in healing solution [6] It is regarded as a substitute detected in the decrease of government medical utility, among other groups, it is a complementary good. In understanding health demand model in Indonesia, which involves traditional medicine, it is expected to improve estimation model for health demand
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