Sickness and Death: Economic Consequences and Coping Strategies of the Urban Poor in Bangladesh

We investigate the economic consequences of sickness and death and the manner in which poor urban households in Bangladesh respond to such events. Based on panel data we assess the effects of morbidity and mortality episodes on household income, medical spending, labor supply, and consumption. We find that despite maintaining household labor supply, serious illness exerts a negative effect on income for the poor. However, the estimates do not reject consumption smoothing. The most prominent responses to finance current needs are increasing household debt through borrowing and depleting productive assets, both of which have detrimental effects on future consumption.