  Are low-income individuals relying on government transfers liquidity
constrained by the end of the month to a degree that they postpone medical
treatment? I investigate this question using Danish administrative data
comprising the universe of welfare recipients and the filling of all
prescription drugs. I find that on transfer income payday, recipients have a
52% increase in the propensity to fill a prescription. By separating
prophylaxis drugs used to treat chronic conditions, where the patient can
anticipate the need to fill the prescription, e.g. cholesterol-lowering
statins, I find an increase of up to 99% increase on payday. Even for drugs
used to treat acute conditions, where timely treatment is essential, I find a
22% increase on payday for antibiotics and a 5-8% decrease in the four days
preceding payday. Lastly, exploiting the difference in day the doctor write the
prescription and the day the patient fill it, I show that liquidity constraints
is the key operating mechanism for postponing antibiotic treatment.
