The Effects of Medicaid Expansion on Labor Market Outcomes: Evidence from Border Counties

Lizhong Peng, Xiaohui (Ronnie) Guo and Chad Meyerhoefer

No 25105, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper provides new empirical evidence on the employment and earning effects of the recent Medicaid expansion. Unlike most existing studies that use a conventional state and year fixed effects approach, our main identification strategy is based on the comparison of employment and wages in contiguous county-pairs in neighboring states (i.e. border counties) with different Medicaid expansion status. Using the 2008-2016 Quarterly Census of Employment and Wages, we estimate a set of distributed lag models in order to examine the dynamic effects of Medicaid expansion. Results from our preferred specification suggest a small but statistically significant decrease in employment of 1.3 percent one year after the Medicaid expansion. This disemployment effect is transitory and appears to primarily occur in low-wage sectors. In particular, employment returns to pre-expansion levels within two years. We also do not find any statistically significant effect of the Medicaid expansion on wages at any point.

JEL-codes: H51 I13 J20 (search for similar items in EconPapers)
Date: 2018-09
New Economics Papers: this item is included in nep-lma
Note: EH LS
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Published as Lizhong Peng & Xiaohui Guo & Chad D. Meyerhoefer, 2020. "The effects of Medicaid expansion on labor market outcomes: Evidence from border counties," Health Economics, vol 29(3), pages 245-260.

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