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Health insurance and the labor supply decisions of older workers: Evidence from a U.S. Department of Veterans Affairs expansion

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Author Info

  • Boyle, Melissa A.
  • Lahey, Joanna N.

Abstract

This paper exploits a major mid-1990s expansion in the U.S. Department of Veterans Affairs health care system to provide evidence on the labor market effects of expanding health insurance availability. Using data from the Current Population Survey, we employ a difference-in-differences strategy to compare the labor market behavior of older veterans and non-veterans before and after the VA health benefits expansion to test the impact of public health insurance on labor supply. We find that older workers are significantly more likely to decrease work both on the extensive and intensive margins after receiving access to non-employer based insurance. Workers with some college education or a college degree are more likely to transition into self-employment, a result consistent with "job-lock" effects. However, less-educated workers are more likely to leave self-employment, a result suggesting that the positive income effect from receiving public insurance dominates the "job-lock" effect for these workers. Some relatively disadvantaged sub-populations may also increase their labor supply after gaining greater access to public insurance, consistent with complementary positive health effects of health care access or decreased work disincentives for these groups. We conclude that this reform has affected employment and retirement decisions, and suggest that future moves toward universal coverage or expansions of Medicare are likely to have significant labor market effects.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 94 (2010)
Issue (Month): 7-8 (August)
Pages: 467-478

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Handle: RePEc:eee:pubeco:v:94:y:2010:i:7-8:p:467-478

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Web page: http://www.elsevier.com/locate/inca/505578

Related research

Keywords: Labor supply Job-lock Retirement Older workers Health insurance VA Medicare Veteran;

References

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Citations

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Cited by:
  1. Nicholas Lawson, 2013. "Fiscal Externalities and Optimal Unemployment Insurance," Working Papers halshs-00907807, HAL.
  2. Maria D. Fitzpatrick, 2013. "Retiree Health Insurance for Public School Employees: Does it Affect Retirement?," NBER Working Papers 19524, National Bureau of Economic Research, Inc.
  3. Sheu, Ji-Tian & Lu, Jui-fen Rachel, 2014. "The spillover effect of National Health Insurance on household consumption patterns: Evidence from a natural experiment in Taiwan," Social Science & Medicine, Elsevier, vol. 111(C), pages 41-49.
  4. Datta Gupta, Nabanita & Kleinjans, Kristin J. & Larsen, Mona, 2011. "The Effect of an Acute Health Shock on Work Behavior: Evidence from Different Health Care Regimes," IZA Discussion Papers 5843, Institute for the Study of Labor (IZA).
  5. David H. Autor & Mark G. Duggan & David S. Lyle, 2011. "Battle Scars? The Puzzling Decline in Employment and Rise in Disability Receipt among Vietnam Era Veterans," American Economic Review, American Economic Association, vol. 101(3), pages 339-44, May.
  6. Marie Olivier & Vall Castello Judit, 2011. "Measuring the (Income) Effect of Disability Insurance Generosity on Labour Market Participation," ROA Research Memorandum 012, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  7. Silva, José I. & Vall-Castello, Judit, 2012. "Why Are So Many Disabled Individuals Not Working in Spain? A Job Search Approach," IZA Discussion Papers 6317, Institute for the Study of Labor (IZA).
  8. Laura Dague & Thomas DeLeire & Lindsey Leininger, 2014. "This study provides plausibly causal estimates of the effect of public insurance coverage on the employment of nonelderly, nondisabled adults without dependent children (“childless adults”). We us," Upjohn Working Papers and Journal Articles 14-213, W.E. Upjohn Institute for Employment Research.
  9. Steven Nyce & Sylvester Schieber & John B. Shoven & Sita Slavov & David A. Wise, 2011. "Does Retiree Health Insurance Encourage Early Retirement?," NBER Working Papers 17703, National Bureau of Economic Research, Inc.
  10. Robert W Fairlie & Kanika Kapur & Susan Gates, 2012. "Job Lock: Evidence from a Regression Discontinuity Design," Working Papers 201215, School Of Economics, University College Dublin.
  11. Nicholas Lawson, 2013. "Fiscal Externalities and Optimal Unemployment Insurance," AMSE Working Papers 1357, Aix-Marseille School of Economics, Marseille, France, revised 21 Nov 2013.
  12. Laura Dague & Thomas DeLeire & Lindsey Leininger, 2014. "The Effect of Public Insurance Coverage for Childless Adults on Labor Supply," NBER Working Papers 20111, National Bureau of Economic Research, Inc.
  13. Dague, Laura & DeLeire, Thomas C. & Leininger, Lindsey, 2014. "The Effect of Public Insurance Coverage for Childless Adults on Labor Supply," IZA Discussion Papers 8187, Institute for the Study of Labor (IZA).

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