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The Impact of the Affordable Care Act Young Adult Provision on Labor Market Outcomes: Evidence from Tax Data

In: Tax Policy and the Economy, Volume 29


  • Bradley Heim
  • Ithai Lurie
  • Kosali Simon


We use a panel data set of US tax records spanning 2008-2012 to study the impact of the Affordable Care Act (ACA) requirement to allow young adult dependents to be covered by their parents' insurance policies on labor market-related outcomes. How health insurance expansions affect young adults through employment and education have important implications for public finance. Since tax data record access to employer-provided fringe benefits on W-2 forms, we are able to examine the impact of this coverage expansion by comparing young adults whose parents have access to benefits to other similar-aged young adults, before and after the law, and to young adults who are slightly older than the age threshold of the law. The use of tax data to identify families who have fringe benefits through their employer is an important advantage because the law was implemented during a labor market recovery in which outcomes could differ by age, even absent the law. Despite sizable increases documented elsewhere in insurance coverage resulting from this law, we find no meaningful changes in labor market-related outcomes. We examine a comprehensive set of outcomes (including measures of employment status, job characteristics, and postsecondary education), and are the first to use a triple-difference strategy to examine labor market effects of this law; we are also the first we know of to use tax data to examine the impact of the ACA on labor market outcomes. Although it is possible that labor market outcomes have changed in ways not captured by tax data (e.g., a change in hours of work while holding total wages constant, or a change in nonreported self-employment), our evidence suggests that the extension of health insurance to young adults did not substantially alter their labor market outcomes thus far.
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  • Bradley Heim & Ithai Lurie & Kosali Simon, 2014. "The Impact of the Affordable Care Act Young Adult Provision on Labor Market Outcomes: Evidence from Tax Data," NBER Chapters, in: Tax Policy and the Economy, Volume 29, pages 133-157, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:13463

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    Cited by:

    1. James Bailey, 2017. "Health insurance and the supply of entrepreneurs: new evidence from the affordable care act," Small Business Economics, Springer, vol. 49(3), pages 627-646, October.
    2. Grumstrup, Ethan & Mobarak Hossain, Md. & Mukhopadhyay, Sankar & Shapoval, Olga, 2019. "The Effects of the Affordable Care Act on Workplace Absenteeism of Overweight and Obese Workers," IZA Discussion Papers 12617, Institute of Labor Economics (IZA).
    3. Hanming Fang & Andrew J. Shephard, 2019. "Household Labor Search, Spousal Insurance, and Health Care Reform," NBER Working Papers 26350, National Bureau of Economic Research, Inc.

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