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Did Expanding Medicaid Affect Welfare Participation?

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Author Info
John C. Ham
Lara D. Shore-Sheppard

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Abstract

Using data from the 1988-1996 Current Population Surveys (CPS), we re-examine the evidence presented in Yelowitz (1995) showing that expansions in Medicaid eligibility for children were associated with increased labor force participation and reduced participation in Aid to Families with Dependent Children (AFDC) among single mothers. We find that Yelowitz's results were the result of two factors. First, he imposed a strong restriction on the parameter estimates that is not predicted by theory and is rejected in the CPS data. Second, he used only one of the two income tests that families must pass to be eligible for AFDC, resulting in higher imputed AFDC breakeven income levels for larger families. Once these problems are addressed, the Medicaid income limits have no significant effect on AFDC participation. The AFDC income limits, however, are significantly related to welfare and labor force participation in both his original sample and the entire 1988-1996 sample.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9803.

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Date of creation: Jun 2003
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Handle: RePEc:nbr:nberwo:9803

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Find related papers by JEL classification:
I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Aaron Yelowitz, 1995. "The Medicaid Notch, Labor Supply and Welfare Participation: Evidence from Eligibility Expansions," UCLA Economics Working Papers 738, UCLA Department of Economics. [Downloadable!]
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  2. Cutler, David M & Gruber, Jonathan, 1996. "Does Public Insurance Crowd Out Private Insurance?," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 391-430, May. [Downloadable!] (restricted)
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  3. Moffitt, Robert & Wolfe, Barbara L, 1992. "The Effect of the Medicaid Program on Welfare Participation and Labor Supply," The Review of Economics and Statistics, MIT Press, vol. 74(4), pages 615-26, November. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Sang-Hyop Lee & Gerard Russo & Lawrence H. Nitz & Abdul Jabbar, 2005. "The Effect of Mandatory Employer-Sponsored Insurance (ESI) on Health Insurance Coverage and Labor Force Utilization in Hawaii: Evidence from the Current Population Survey (CPS) 1994-2004," Working Papers 200512, University of Hawaii at Manoa, Department of Economics. [Downloadable!]
  2. Adam Looney, 2005. "The effects of welfare reform and related policies on single mothers' welfare use and employment," Finance and Economics Discussion Series 2005-45, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  3. Phillip B. Levine & Diane Whitmore Schanzenbach, 2009. "The Impact of Children's Public Health Insurance Expansions on Educational Outcomes," NBER Working Papers 14671, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Brigitte Madrian, 2006. "The U.S. Health Care System and Labor Markets," NBER Working Papers 11980, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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