Abstract
This is the first paper to investigate the determinants of the demand for medical care in the People's Republic of China. It uses a data set that consists of detailed characteristics of 6407 urban households, a continuous measure of health care spending, and price. A two-part model and a discrete factor model are used in the estimation. Household characteristics and work conditions impact the demand for medical care. Income elasticity is around 0.3, indicating medical care is a necessity. Medical care demand is price inelastic, and price elasticity is larger in absolute value for poorer households.
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