Do Health Care Providers Respond to Demand-Side Incentives? Evidence from Indonesia

This paper exploits the subdistrict randomization of Indonesia's household Conditional Cash Transfer (CCT) program to analyze how the program affects the local health care market. The CCT program is associated with increased use of midwives as the main delivery attendants. The program is also associated with a 10 percent increase in both the number of midwives and the delivery fees charged by midwives in treated communities. Program participants report receiving a higher quality of prenatal care. This is due, however, not to improvements in quality of care in the market, but to increased utilization among program participants.