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Health Insurance and the Labor Supply Decisions of Older Workers: Evidence from the U.S. Department of Veterans Affairs

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Author Info

  • Melissa Boyle

    ()
    (Department of Economics, College of the Holy Cross)

  • Joanna N. Lahey

    ()
    (Texas A&M University)

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 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. Older workers are also more likely to leave self-employment, a result inconsistent with "job-lock" effects of employer-based insurance, but consistent with a positive income effect from new access to public insurance. Some relatively disadvantaged subpopulations, however, may increase their labor supply after gaining greater access to public insurance, consistent with complementary positive health effects of health care access 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. To illustrate, we calculate that as much as 10% of the difference in retirement rates in the US and Canada may be due to Canada's provision of universal health care.

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File URL: http://college.holycross.edu/RePEc/hcx/Boyle_VeteransInsurance.pdf
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Bibliographic Info

Paper provided by College of the Holy Cross, Department of Economics in its series Working Papers with number 0801.

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Length: 27 pages
Date of creation: Jan 2008
Date of revision:
Handle: RePEc:hcx:wpaper:0801

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Keywords: labor supply; job-lock; retirement; older workers; health insurance; VA; Medicare; veteran;

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Cited by:
  1. Vincent Touzé, 2010. "Le système de retraite américain : impact de la crise et tendances de long terme," Documents de Travail de l'OFCE 2010-27, Observatoire Francais des Conjonctures Economiques (OFCE).
  2. Fairlie, Robert W. & Kapur, Kanika & Gates, Susan, 2013. "Job Lock: Evidence from a Regression Discontinuity Design," IZA Discussion Papers 7785, Institute for the Study of Labor (IZA).
  3. Gérard Cornilleau & Catherine Mathieu & Henri Sterdyniak & Vincent Touzé, 2010. "Les réformes des retraites en Europe dans la crise," Documents de Travail de l'OFCE 2010-17, Observatoire Francais des Conjonctures Economiques (OFCE).
  4. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09hai2o91j4 is not listed on IDEAS
  5. repec:spo:wpecon:info:hdl:2441/5l6uh8ogmqildh09h8492c58l is not listed on IDEAS

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