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Wedges, Labor Market Behavior, and Health Insurance Coverage under the Affordable Care Act

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  • Trevor S. Gallen
  • Casey B. Mulligan

Abstract

The Affordable Care Act's taxes, subsidies, and regulations significantly alter terms of trade in both goods and factor markets. We use a multi-sector (intra-national) trade model to predict and quantify consequences of the Affordable Care Act for the incidence of health insurance coverage and patterns of labor usage. If and when the new exchange plans are competitive with employer-sponsored insurance (ESI), our model suggests that more than 20 million people will leave ESI as a consequence of the law. Behavioral changes that are captured in the model could add about 3 million participants to the new exchange plans: beyond those that would participate solely as the result of employer decisions to stop offering coverage and beyond those who would have been uninsured. Industries and regions will grow, decline, and change coverage on the basis of their relative demand for skilled labor.

Suggested Citation

  • Trevor S. Gallen & Casey B. Mulligan, 2013. "Wedges, Labor Market Behavior, and Health Insurance Coverage under the Affordable Care Act," NBER Working Papers 19770, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19770
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    File URL: http://www.nber.org/papers/w19770.pdf
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    References listed on IDEAS

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    1. Arnold C. Harberger, 1962. "The Incidence of the Corporation Income Tax," Journal of Political Economy, University of Chicago Press, vol. 70, pages 215-215.
    2. Unel, Bulent, 2010. "Analyzing skilled and unskilled labor efficiencies in the US," Journal of Macroeconomics, Elsevier, vol. 32(4), pages 957-967, December.
    3. Casey B. Mulligan & Trevor S. Gallen, 2013. "Wedges, Wages, and Productivity under the Affordable Care Act," NBER Working Papers 19771, National Bureau of Economic Research, Inc.
    4. Richard V. Burkhauser & Sean Lyons & Kosali I. Simon, 2011. "The Importance of the Meaning and Measurement of "Affordable" in the Affordable Care Act," NBER Working Papers 17279, National Bureau of Economic Research, Inc.
    5. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
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    Cited by:

    1. Casey B. Mulligan, 2015. "The New Full-Time Employment Taxes," Tax Policy and the Economy, University of Chicago Press, vol. 29(1), pages 89-132.
    2. Casey B. Mulligan, 2017. "The Employer Penalty, Voluntary Compliance, and the Size Distribution of Firms: Evidence from a Survey of Small Businesses," NBER Working Papers 24037, National Bureau of Economic Research, Inc.
    3. Casey B. Mulligan & Trevor S. Gallen, 2013. "Wedges, Wages, and Productivity under the Affordable Care Act," NBER Working Papers 19771, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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