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Did Expanding Medicaid Affect Welfare Participation?

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  • John C. Ham
  • Lara D. Shore-Sheppard

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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Publication status: published as Ham, John C. and Lara D. Shore-Sheppard. "Did Expanding Medicaid Affect Welfare Participation?," Industrial and Labor Relations Review, 2005, v58(3,Apr), 452-470.
Handle: RePEc:nbr:nberwo:9803

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  1. Aaron Yelowitz, 1995. "The Medicaid Notch, Labor Supply and Welfare Participation: Evidence from Eligibility Expansions," UCLA Economics Working Papers, UCLA Department of Economics 738, UCLA Department of Economics.
  2. Cutler, David M & Gruber, Jonathan, 1996. "Does Public Insurance Crowd Out Private Insurance?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 111(2), pages 391-430, May.
  3. Bruce D. Meyer & Dan T. Rosenbaum, 2001. "Welfare, The Earned Income Tax Credit, And The Labor Supply Of Single Mothers," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(3), pages 1063-1114, August.
  4. 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.
  5. Rebecca M. Blank, 1989. "The Effect of Medical Need and Medicaid on AFDC Participation," Journal of Human Resources, University of Wisconsin Press, vol. 24(1), pages 54-87.
  6. Anne E. Winkler, 1991. "The Incentive Effects of Medicaid on Women's Labor Supply," Journal of Human Resources, University of Wisconsin Press, vol. 26(2), pages 308-337.
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Cited by:
  1. Robert A. Moffitt, 2012. "The U.S. Employment-Population Reversal in the 2000s: Facts and Explanations," Economics Working Paper Archive, The Johns Hopkins University,Department of Economics 604, The Johns Hopkins University,Department of Economics.
  2. Adam Looney, 2005. "The effects of welfare reform and related policies on single mothers' welfare use and employment," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2005-45, Board of Governors of the Federal Reserve System (U.S.).
  3. Brigitte C. Madrian, 2005. "The U.S. health care system and labor markets," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, Federal Reserve Bank of Boston, vol. 50(Jun), pages 137-163.
  4. Levine Phillip B & Schanzenbach Diane, 2009. "The Impact of Children's Public Health Insurance Expansions on Educational Outcomes," Forum for Health Economics & Policy, De Gruyter, De Gruyter, vol. 12(1), pages 1-28, May.
  5. Strumpf, Erin, 2011. "Medicaid's effect on single women's labor supply: Evidence from the introduction of Medicaid," Journal of Health Economics, Elsevier, Elsevier, vol. 30(3), pages 531-548, May.
  6. 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).
  7. 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, University of Hawaii at Manoa, Department of Economics 200512, University of Hawaii at Manoa, Department of Economics.
  8. Sandra Decker & Frederic Selck, 2012. "The effect of the original introduction of Medicaid on welfare participation and female labor supply," Review of Economics of the Household, Springer, Springer, vol. 10(4), pages 541-556, December.

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