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Equilibrium Labor Market Search and Health Insurance Reform

Author

Listed:
  • Naoki Aizawa

    (Department of Economics, University of Pennsylvania)

  • Hanming Fang

    (Department of Economics, University of Pennsylvania)

Abstract

We present and empirically implement an equilibrium labor market search model where risk averse workers facing medical expenditure shocks are matched with firms making health insurance coverage decisions. Our model delivers a rich set of predictions that can account for a wide variety of phenomenon observed in the data including the correlations among firm sizes, wages, health insurance offering rates, turnover rates and workers' health compositions. We estimate our model by Generalized Method of Moments using a combination of micro data sources including Survey of Income and Program Participation (SIPP), Medical Expenditure Panel Survey (MEPS) and Robert Wood Johnson Foundation Employer Health Insurance Survey. We use our estimated model to evaluate the equilibrium impact of the 2010 Affordable Care Act (ACA) and find that it would reduce the uninsured rate among the workers in our estimation sample from 20.12% to 7.27%. We also examine a variety of alternative policies to understand the roles of different components of the ACA in contributing to these equilibrium changes. Interestingly, we find that the uninsured rate will be even lower (at 6.44%) if the employer mandate in the ACA is eliminated.

Suggested Citation

  • Naoki Aizawa & Hanming Fang, 2013. "Equilibrium Labor Market Search and Health Insurance Reform," PIER Working Paper Archive 13-002, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  • Handle: RePEc:pen:papers:13-002
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Chris Sampson’s journal round-up for 7th December 2020
      by Chris Sampson in The Academic Health Economists' Blog on 2020-12-07 12:00:03

    Citations

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    Cited by:

    1. J. Ignacio García‐Pérez & Sílvio Rendon, 2020. "Family job search and wealth: The added worker effect revisited," Quantitative Economics, Econometric Society, vol. 11(4), pages 1431-1459, November.
    2. Arnaud Chéron & Pierre-jean Messe & Jerome Ronchetti, 2015. "Employer-provided health insurance and equilibrium wages with two-sided heterogeneity," Economics Bulletin, AccessEcon, vol. 35(2), pages 1109-1117.
    3. Capatina, Elena, 2020. "Selection in employer sponsored health insurance," Journal of Health Economics, Elsevier, vol. 71(C).
    4. Didem Tuzemen & Makoto Nakajima, 2014. "Health Care Reform or Labor Market Reform? A Quantitative Analysis of the Affordable Care Act," 2014 Meeting Papers 1325, Society for Economic Dynamics.
    5. Conti, Gabriella & Ginja, Rita & Narita, Renata, 2018. "The Value of Health Insurance: A Household Job Search Approach," IZA Discussion Papers 11706, Institute of Labor Economics (IZA).
    6. Cui, Kun & Li, Bo & Wang, Hanyang, 2021. "Quantitative analysis of health insurance reform in China: Pure consolidation or universal health insurance?," Economic Modelling, Elsevier, vol. 101(C).
    7. Kolstad, Jonathan T. & Kowalski, Amanda E., 2016. "Mandate-based health reform and the labor market: Evidence from the Massachusetts reform," Journal of Health Economics, Elsevier, vol. 47(C), pages 81-106.
    8. Chao Fu & Naoki Aizawa, 2017. "Local Market Equilibrium and the Design of Public Health Insurance System," 2017 Meeting Papers 1448, Society for Economic Dynamics.
    9. Gabriella Conti & Rita Ginja, Renata Narita, 2017. "Non-Contributory Health Insurance and Household Labor Supply: Evidence from Mexico," Working Papers, Department of Economics 2017_17, University of São Paulo (FEA-USP).
    10. Fang, H., 2016. "Insurance Markets for the Elderly," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 237-309, Elsevier.
    11. Juan Pablo Atal & Hanming Fang & Martin Karlsson & Nicolas R. Ziebarth, 2020. "Long-Term Health Insurance: Theory Meets Evidence," PIER Working Paper Archive 20-009, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    12. Borghorst, Malte & Mulalic, Ismir & van Ommeren, Jos, 2021. "Commuting, Children and the Gender Wage Gap," Working Papers 15-2021, Copenhagen Business School, Department of Economics.
    13. Vegard M. Nygaard & Gajendran Raveendranathan, 2021. "The impact of U.S. employer-sponsored insurance in the 20th century," Department of Economics Working Papers 2021-11, McMaster University.
    14. Hanming Fang & Ami Ko, 2018. "Partial Rating Area Offering in the ACA Marketplaces: Facts, Theory and Evidence," PIER Working Paper Archive 18-025, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Oct 2018.
    15. Ann P. Bartel & Carri W. Chan & Song-Hee (Hailey) Kim, 2014. "Should Hospitals Keep Their Patients Longer? The Role of Inpatient Care in Reducing Post-Discharge Mortality," NBER Working Papers 20499, National Bureau of Economic Research, Inc.
    16. R. Vincent Pohl, 2018. "Medicaid And The Labor Supply Of Single Mothers: Implications For Health Care Reform," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(3), pages 1283-1313, August.

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    More about this item

    Keywords

    Health; Health Insurance; Health Care Reform; Labor Market Equilibrium;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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