Evaluating the Impact of Catastrophic Health Payments on School Interruption: The case of Mexico

Abstract: Catastrophic health disbursements produce numerous injuries in the families experiencing them. Increasing the level of impoverishment and reducing the expenditure on basic needs such as education, are expected to be the most disastrous consequences in which uncovered families may be involved. Through the use of a matching procedure and a diff-in-diff method, the impact of out-of-pocket health expenditures on school interruption is measured for the case of Mexico. Consistent with the theory and recent empirical evidence, the findings expose that households experiencing an unexpected health shocks with disturbing effects on financial stability, have a negative impact on youth living within the affected family to finish schooling on time. Besides, it is found that initial endowments and parental background are determinant factors in the decision-making process when economic hardship is present.