Does Medicaid Expansion Affect Employment Transitions?
43 Pages Posted: 31 Dec 2016 Last revised: 1 Nov 2017
Date Written: October 31, 2017
This paper investigates the pre/post labor market implications of the Affordable Care Act's (ACA) Medicaid expansion for a population near the eligibility cutoff. Using an arguably exogenous variation at the eligibility cutoff, I find that Medicaid enrollment increases for adults without dependent children. This leads to an employment transition from full-time (≥35 Hrs) to part-time employment (<35 Hrs) after the expansion. The employment transition is mainly driven by the increase in employment for working less than 20 hours. Falsicification checks show no effect on employment for non-expansion states and Medicare-eligible adult groups. The estimates are robust to the inclusion of early expansion states, increasing bandwidths, and various functional forms of the running variable. These findings imply that individuals primarly work to secure private health insurance ("employment-lock") prior to the expansion. When replicating the existing studies that use a difference-in-differences (DD) model with expansion states as the treatment group, I find no employment effects. The main limitation of this DD model is the large and heterogeneous treatment group that includes adults who are less likely to be eligible for Medicaid.
Keywords: ACA's Medicaid expansion, labor market outcomes, employment-lock, difference-in-discontinuities
JEL Classification: C21, J21, J26, I10
Suggested Citation: Suggested Citation