Spousal Labor Market Effects from Government Health Insurance: Evidence from a Veterans Affairs Expansion
AbstractAlthough government expansion of health insurance to older workers leads to labor supply reductions for recipients, there may be spillover effects on the labor supply of affected spouses who are not covered by the programs. In the simplest model, health insurance on the job is paid for in terms of lower compensation on the job. Receiving health insurance exogenous to employment is akin to a positive income shock for the household, causing total household labor supply to drop. However, it is not clear within the household whether this decrease in labor supply will be borne by both spouses or by a specific spouse. We use a mid-1990s expansion of health insurance for U.S. veterans to provide evidence on the effects of expanding health insurance availability on the labor supply of spouses. Using data from the Current Population Survey, we employ a difference-in-differences strategy to compare the labor market behavior of the wives of older male veterans and non-veterans before and after the VA health benefits expansion to test the impact of public health insurance on these spouses. Our findings suggest that although household labor supply may decrease because of the income effect, the more flexible labor supply of wives allows the wife’s labor supply to increase, particularly for those with lower education levels.
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Bibliographic InfoPaper provided by College of the Holy Cross, Department of Economics in its series Working Papers with number 1111.
Length: 36 pages
Date of creation: Aug 2011
Date of revision:
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Web page: http://www.holycross.edu/departments/economics/website/
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Health Economics; Labor force participation;
Other versions of this item:
- Melissa A. Boyle & Joanna N. Lahey, 2012. "Spousal Labor Market Effects from Government Health Insurance: Evidence from a Veterans Affairs Expansion," Working Papers, Center for Retirement Research at Boston College wp2012-16, Center for Retirement Research, revised May 2012.
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-09-05 (All new papers)
- NEP-HEA-2011-09-05 (Health Economics)
- NEP-IAS-2011-09-05 (Insurance Economics)
- NEP-LAB-2011-09-05 (Labour Economics)
- NEP-LMA-2011-09-05 (Labor Markets - Supply, Demand, & Wages)
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