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Health Care Reform or Labor Market Reform? A Quantitative Analysis of the Affordable Care Act

Author

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  • Didem Tuzemen

    (Federal Reserve Bank of Kansas City)

  • Makoto Nakajima

    (Federal Reserve Bank of Philadelphia)

Abstract

The Patient Protection and Affordable Care Act (ACA) requires all individuals to have health insurance, and introduces penalties to large firms that do not offer affordable coverage to their employees. While the possible effects of the ACA on the insurance decision of individuals have been studied, what is less studied is how the ACA can affect labor demand. In particular, since the ACA does not require small firms to offer health insurance, and does not require firms to offer health insurance to part-time employees, there are concerns that employers will either stay small, or replace full-time workers with part-time workers in order to avoid offering health insurance to their employees. The main focus of this paper is to study the effects from the distortions caused by the ACA, modeling employer’ decision on hiring part-time and full-time workers, as well as the decision to offer coverage. The aim is to quantify the effect of the possible changes in the size distribution of firms and the composition of the labor force on employment, aggregate output, and welfare.

Suggested Citation

  • 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.
  • Handle: RePEc:red:sed014:1325
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    References listed on IDEAS

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    Cited by:

    1. Zhigang Feng & Kai Zhao, 2015. "Employment-Based Health Insurance and Aggregate Labor Supply," Working papers 2015-11, University of Connecticut, Department of Economics.
    2. Dillender, Marcus O. & Heinrich, Carolyn J. & Houseman, Susan N., 2016. "Health insurance reform and part-time work: Evidence from Massachusetts," Labour Economics, Elsevier, vol. 43(C), pages 151-158.
    3. Chao Fu & Naoki Aizawa, 2017. "Local Market Equilibrium and the Design of Public Health Insurance System," 2017 Meeting Papers 1448, Society for Economic Dynamics.

    More about this item

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • I10 - Health, Education, and Welfare - - Health - - - General

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