Spousal Labor Market Effects from Government Health Insurance: Evidence from a Veterans Affairs Expansion

Melissa Boyle and Joanna Lahey

No 1111, Working Papers from College of the Holy Cross, Department of Economics

Abstract: Although government expansion of health insurance to older workers leads to labor supply reductions for recipients, there may be spillover effects on the labor supply of affected spouses who are not covered by the programs. In the simplest model, health insurance on the job is paid for in terms of lower compensation on the job. Receiving health insurance exogenous to employment is akin to a positive income shock for the household, causing total household labor supply to drop. However, it is not clear within the household whether this decrease in labor supply will be borne by both spouses or by a specific spouse. We use a mid-1990s expansion of health insurance for U.S. veterans to provide evidence on the effects of expanding health insurance availability on the labor supply of spouses. Using data from the Current Population Survey, we employ a difference-in-differences strategy to compare the labor market behavior of the wives of older male veterans and non-veterans before and after the VA health benefits expansion to test the impact of public health insurance on these spouses. Our findings suggest that although household labor supply may decrease because of the income effect, the more flexible labor supply of wives allows the wife’s labor supply to increase, particularly for those with lower education levels.

Keywords: Health Economics; Labor force participation (search for similar items in EconPapers)
JEL-codes: H51 I11 I18 J26 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2011-08
New Economics Papers: this item is included in nep-hea, nep-ias, nep-lab and nep-lma
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Published in Journal of Health Economics, Volume 45, January 2016, pp. 63-76.

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https://hcapps.holycross.edu/hcs/RePEc/hcx/HC1111- ... lHealthInsurance.pdf (application/pdf)

Related works:
Journal Article: Spousal labor market effects from government health insurance: Evidence from a veterans affairs expansion (2016)
Working Paper: Spousal Labor Market Effects from Government Health Insurance: Evidence from a Veterans Affairs Expansion (2014)
Working Paper: Spousal Labor Market Effects from Government Health Insurance: Evidence from a Veterans Affairs Expansion (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hcx:wpaper:1111

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