50 Pages Posted: 31 Dec 2016
Date Written: December 29, 2016
The Affordable Care Act expanded Medicaid eligibility to adults who are below 138 percent of the federal poverty level. There is little to no evidence on the employment effects of the Medicaid expansion in 2014. This paper investigates the pre/post labor market implications of Medicaid expansion with a population near the eligibility cutoff. Using an exogenous variation at the eligibility cutoff, I find a large reduction in part-time employment (<35 Hrs) relative to full-time employment (≥35 Hrs). The reduction in part-time employment (<35 Hrs) suggests that most of the individuals drop out of the labor force, although some transition into full-time employment (≥35 Hrs) or unemployment. The employment transitions imply that labor supply is flexible after being eligible for Medicaid. The labor supply flexibility is also observed for females, middle-aged adults (49-64 years of age), never-married adults and high-school dropouts. When difference-in-differences (DD) model is used for the whole population, the estimates are similar to those in the literature that find no employment effects. The DD model, however, fails to incorporate eligibility measures and also includes adults who are less likely to have Medicaid.
Keywords: Medicaid expansion, Affordable Care Act, labor market outcomes, employment transitions, difference-in-discontinuities
JEL Classification: C21, J21, J26, I10
Suggested Citation: Suggested Citation