Financial Incentives in Health : New Evidence from India's Janani Suraksha Yojana

This paper studies the health effects of one of the world's largest demand-side financial incentive programes - India's Janani Suraksha Yojana. Our difference-in-difference estimates exploit heterogeneity in the timing of the introduction of the financial incentive programs across districts. We find that cash incentives to women increased access to maternity services but failed to improve neonatal or early neonatal mortality, even in districts with relatively high quality of care. The positive effects on utilization are larger for less educated, poorer, and ethnically marginalized women. We also find evidence of unintended consequences. The financial incentive program was associated with a substitution away from private health providers, an increase in fertility and a positive improvement in breastfeeding behaviour. These findings demonstrate the potential for financial incentives to have unanticipated health effects, which may, in the case of fertility, directly undermine the program's own objective of reducing mortality