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Medicaid's effect on single women's labor supply: Evidence from the introduction of Medicaid

  • Strumpf, Erin

This paper examines the impact of the introduction of the Medicaid program on labor supply decisions among single women in the late 1960s and early 1970s. I use a differences-in-differences-in-differences methodology to estimate the effect of Medicaid on eligible women's labor force participation, using variation in the timing of Medicaid implementation across states and in eligibility across demographic groups. Using March supplements to the CPS from 1963 to 1975, I find no evidence that women who were eligible for Medicaid decreased their labor supply relative to ineligible women, in contrast to clear theoretical predictions of a negative supply response. Positive point estimates suggest that health benefits from health insurance coverage may have contributed to relative increases in labor supply. These results add to an emerging consensus that public health insurance programs for low-income parents and children may be able to improve access to care without substantial indirect costs from labor supply distortions.

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Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 30 (2011)
Issue (Month): 3 (May)
Pages: 531-548

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Handle: RePEc:eee:jhecon:v:30:y:2011:i:3:p:531-548
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  1. John C. Ham & Lara D. Shore-Sheppard, 2003. "Did Expanding Medicaid Affect Welfare Participation?," Department of Economics Working Papers 2003-08, Department of Economics, Williams College.
  2. Bruce D. Meyer & Dan T. Rosenbaum, 1999. "Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers," NBER Working Papers 7363, National Bureau of Economic Research, Inc.
  3. Aaron S. Yelowitz, 1995. "The Medicaid Notch, Labor Supply, and Welfare Participation: Evidence from Eligibility Expansions," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 909-939.
  4. Jonathan Gruber & Brigitte C. Madrian, 2002. "Health Insurance, Labor Supply, and Job Mobility: A Critical Review of the Literature," JCPR Working Papers 255, Northwestern University/University of Chicago Joint Center for Poverty Research.
  5. Daron Acemoglu & David H. Autor & David Lyle, 2002. "Women, War and Wages: The Effect of Female Labor Supply on the Wage Structure at Mid-Century," NBER Working Papers 9013, National Bureau of Economic Research, Inc.
  6. Goldin, Claudia, 1992. "Understanding the Gender Gap: An Economic History of American Women," OUP Catalogue, Oxford University Press, number 9780195072709, December.
  7. Jens Ludwig & Douglas L. Miller, 2007. "Does Head Start Improve Children's Life Chances? Evidence from a Regression Discontinuity Design," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 159-208.
  8. Hilary W. Hoynes & Diane Schanzenbach, 2007. "Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program," NBER Working Papers 13025, National Bureau of Economic Research, Inc.
  9. Janet Currie & Jonathan Gruber, 1996. "Health Insurance Eligibility, Utilization of Medical Care, and Child Health," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 431-466.
  10. 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.
  11. Gruber, Jonathan, 1994. "The Incidence of Mandated Maternity Benefits," American Economic Review, American Economic Association, vol. 84(3), pages 622-41, June.
  12. 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.
  13. 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.
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