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Did expanding Medicaid affect welfare participation?

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

In a widely cited 1995 paper, Aaron Yelowitz concluded that Medicaid eligibility expansions for children were associated with increased labor force participation and reduced welfare participation among single mothers. The authors of the present study, using data from the 1988-96 Current Population Surveys, re-examine the evidence presented by Yelowitz. They find that Yelowitz's results resulted from two factors: he imposed a restriction on the parameter estimates not predicted by theory and rejected in the data, and he used only one of two income tests that families must pass to be eligible for welfare. The authors conclude that there is no evidence detectable in the CPS data of a relationship between welfare or labor force participation and the Medicaid income limits. (Free full-text download available at http://digitalcommons.ilr.cornell.edu/ilrreview/.)

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Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 58 (2005)
Issue (Month): 3 (April)
Pages: 452-470

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Handle: RePEc:ilr:articl:v:58:y:2005:i:3:p:452-470
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  1. A. S. Yelowitz, . "The Medicaid notch, labor supply, and welfare participation: Evidence from eligibility expansions," Institute for Research on Poverty Discussion Papers 1084-96, University of Wisconsin Institute for Research on Poverty.
  2. 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.
  3. 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.
  4. 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, vol. 116(3), pages 1063-1114, August.
  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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