Health Insurance and the Labor Supply Decisions of Older Workers: Evidence from the U.S. Department of Veterans Affairs
AbstractThis 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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Bibliographic InfoPaper provided by College of the Holy Cross, Department of Economics in its series Working Papers with number 0801.
Length: 27 pages
Date of creation: Jan 2008
Date of revision:
Contact details of provider:
Fax: (508) 793-3708
Web page: http://www.holycross.edu/departments/economics/website/
More information through EDIRC
labor supply; job-lock; retirement; older workers; health insurance; VA; Medicare; veteran;
Other versions of this item:
- Melissa A. Boyle & Joanna N. Lahey, 2007. "Health Insurance and the Labor Supply Decisions of Older Workers: Evidence from the U.S. Department of Veterans Affairs," Working Papers, Center for Retirement Research at Boston College wp2007-23, Center for Retirement Research, revised Dec 2007.
- J2 - Labor and Demographic Economics - - Demand and Supply of Labor
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
This paper has been announced in the following NEP Reports:
- NEP-AGE-2008-02-23 (Economics of Ageing)
- NEP-ALL-2008-02-23 (All new papers)
- NEP-HEA-2008-02-23 (Health Economics)
- NEP-IAS-2008-02-23 (Insurance Economics)
- NEP-LAB-2008-02-23 (Labour Economics)
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