Health Insurance and the Earnings Stability of Low-Income Households
70 Pages Posted: 12 Jan 2018 Last revised: 20 Oct 2018
Date Written: November 21, 2017
We evaluate the effect of health insurance on negative earnings shocks using the administrative tax data and survey responses of 4,975 low-income households. We exploit exogenous variation in the cost of private insurance under the Affordable Care Act using a regression discontinuity (RD) design. Eligibility to purchase subsidized private insurance is associated with a 29 and 22 percent decline in the rates of unexpected job loss and income loss, respectively. Effects are concentrated among households with past health costs and exist only for “unexpected” forms of earnings variation, suggesting a health-productivity link. Rudimentary calculations based on our RD estimate imply a $256-$476 per year welfare benefit of health insurance in terms of reduced exposure to job loss.
Keywords: regression discontinuity, Affordable Care Act, subsidies, labor supply, income volatility, productivity
JEL Classification: D10, H51, I13, J22
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