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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

Author

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  • Bradley Heim
  • Ithai Lurie
  • Kosali Simon

Abstract

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. Heim, Bradley & Lurie, Ithai & Mullen, Kathleen J. & Simon, Kosali, 2021. "How Much Do Outside Options Matter? The Effect of Subsidized Health Insurance on Social Security Disability Insurance Benefit Receipt," Journal of Health Economics, Elsevier, vol. 76(C).
    4. Julio Aguirre & Elmer Guerrero & Yohnny Campana, 2021. "How effective are protected natural areas when roads are present? An analysis of the Peruvian case," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(4), pages 831-859, October.
    5. Tim Bersak, 2019. "Identification of Job Lock and Inefficient Labor Market Mobility," Southern Economic Journal, John Wiley & Sons, vol. 86(2), pages 530-547, October.
    6. Mark Duggan & Gopi Shah Goda & Emilie Jackson, 2019. "The Effects of the Affordable Care Act on Health Insurance Coverage and Labor Market Outcomes," National Tax Journal, National Tax Association;National Tax Journal, vol. 72(2), pages 261-322, June.
    7. Isaac, Elliott & Jiang, Haibin, 2022. "Tax-Based Marriage Incentives in the Affordable Care Act," IZA Discussion Papers 15331, Institute of Labor Economics (IZA).
    8. Jonathan Gruber & Benjamin D. Sommers, 2019. "The Affordable Care Act’s Effects on Patients, Providers and the Economy: What We’ve Learned So Far," NBER Working Papers 25932, National Bureau of Economic Research, Inc.
    9. Jie Ma & Kosali I. Simon, 2020. "Heterogeneous Effects Of Health Insurance On Birth Related Outcomes: Unpacking Compositional Vs. Direct Changes," NBER Working Papers 27728, National Bureau of Economic Research, Inc.
    10. Daeho Kim, 2022. "The Effect of the Affordable Care Act Dependent Coverage Mandate on Health Insurance and Labor Supply: Evidence from Alternative Research Designs," ILR Review, Cornell University, ILR School, vol. 75(3), pages 769-793, May.
    11. repec:mrr:papers:wp341 is not listed on IDEAS
    12. Gopi Shah Goda & Monica Farid & Jay Bhattacharya, 2016. "The Incidence of Mandated Health Insurance: Evidence from the Affordable Care Act Dependent Care Mandate," NBER Working Papers 21846, National Bureau of Economic Research, Inc.
    13. Serakos Maria & Wolfe Barbara, 2016. "The ACA: Impacts on Health, Access, and Employment," Forum for Health Economics & Policy, De Gruyter, vol. 19(2), pages 201-259, December.
    14. 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.
    15. Juergen Jung & Vinish Shrestha, 2018. "The Affordable Care Act And College Enrollment Decisions," Economic Inquiry, Western Economic Association International, vol. 56(4), pages 1980-2009, October.
    16. Michael R. Richards & Sebastian Tello‐Trillo, 2021. "Private coverage mandates, business cycles, and provider treatment intensity," Health Economics, John Wiley & Sons, Ltd., vol. 30(5), pages 1200-1221, May.
    17. Scott Barkowski, 2020. "Does government health insurance reduce job lock and job push?," Southern Economic Journal, John Wiley & Sons, vol. 87(1), pages 122-169, July.
    18. Joanna Woronkowicz & Aparna Soni & Seth Freedman & Kosali Simon, 2020. "How have recent health insurance expansions affected coverage among artist occupations in the USA?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 44(1), pages 117-154, March.
    19. Otto Lenhart & Vinish Shrestha, 2016. "The Effect of the Health Insurance Mandate on Labor Market Activity and Time Allocation: Evidence from the Federal Dependent Coverage Provision," Working Papers 2016-10, Towson University, Department of Economics, revised Apr 2016.
    20. Jie Ma & Kosali Simon, 2021. "Heterogeneous effects of health insurance on birth related outcomes: Unpacking compositional versus direct changes," Contemporary Economic Policy, Western Economic Association International, vol. 39(3), pages 626-640, July.

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