Massachusetts Institute of Technology Press (MIT Press)
Abstract
We study the effects of incentivizing individuals to use healthcare in the presence of congestion
externalities. Our theoretical model highlights interesting interactions between the size and
shape of the congestion externality, and what drives selection into institutional delivery.
We focus on a conditional cash transfer program (JSY) in India that paid women to give
birth in medical facilities. In areas with below-median health-system capacity, JSY increased
perinatal mortality. We provide evidence that a congestion externality was a key driver
of these harmful effects. Moreover, JSY reduced childhood vaccination rates suggesting a
diversion of resources away from routine services
