The effect of pollution on the inequality in health care expenditure: Evidence from China

This study is designed to investigate the impact of pollution on the inequality in health care expenditure. We use the method of stochastic frontier function to model residents' demand of health care services, and then measure the inequality by the relative distance between the optimal demand and the actual demand. With the annual data over 2002-2015 for China's 30 provinces, the estimates suggest that the average value of the inequality is 0.161 for China's 30 provinces in 2015, which is fairly large and cannot be ignored. Meanwhile, our results reveal that a 1% decrease in pollution would result in a 0.386% decrease in the inequality in health care expenditure. Finally, it is concluded that pollution plays an important role in driving the inequality in health care expenditure, which also confirms the potential benefits of pollution reductions.