American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Making Bricks from Straw: Resources and Productivity in Health Care
American Economic Review
(pp. 1499–1539)
Abstract
Why do health facilities in developing countries do so poorly? This paper examines the role of financial constraints. I describe an experiment in which we surprised health workers in randomly selected public health clinics in Nigeria with a ₦600,000 grant paid out in installments over one year. Its administration was left entirely to health workers. The award led to large productivity gains. Using expenditure data combined with novel textual data, I provide an explanation for these effects. I show the award increased investments in physical and human capital, led to lower prices for patients, and inspired health workers to do better.Citation
Okeke, Edward N. 2026. "Making Bricks from Straw: Resources and Productivity in Health Care." American Economic Review 116 (4): 1499–1539. DOI: 10.1257/aer.20241459Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
- H75 State and Local Government: Health; Education; Welfare; Public Pensions
- I11 Analysis of Health Care Markets
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration