Spousal labor market effects from government health insurance: Evidence from a veterans affairs expansion.

TitleSpousal labor market effects from government health insurance: Evidence from a veterans affairs expansion.
Publication TypeJournal Article
Year of Publication2016
AuthorsBoyle, MA, Lahey, JN
JournalJ Health Econ
Date Published2016 Jan
ISSN Number1879-1646
KeywordsEmployment, Female, Government Programs, Humans, Insurance, Health, Male, Middle Aged, Spouses, Surveys and Questionnaires, United States, Veterans

Measuring the total impact of health insurance receipt on household labor supply is important in an era of increased access to publicly provided and subsidized insurance. Although government expansion of health insurance to older workers leads to direct labor supply reductions for recipients, there may be spillover effects on the labor supply of uncovered spouses. While the most basic model predicts a decrease in overall household work hours, financial incentives such as credit constraints, target income levels, and the need for own health insurance suggest that spousal labor supply might increase. In contrast, complementarities of spousal leisure would predict a decrease in labor supply for both spouses. Utilizing a mid-1990s expansion of health insurance for U.S. veterans, we provide evidence on the effects of public insurance availability on the labor supply of spouses. Using data from the Current Population Survey and Health and Retirement Study, 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. Although husbands' labor supply decreases, wives' labor supply increases, suggesting that financial incentives dominate complementarities of spousal leisure. This effect is strongest for wives with lower education levels and lower levels of household wealth and those who were not previously employed full-time. These findings have implications for government programs such as Medicare and Social Security and the Affordable Care Act.


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Endnote Keywords

labor Force Participation/labor Supply/health Insurance/Current Population Survey/affordable care act/veterans/VA health benefits/Medicare

Endnote ID


Alternate JournalJ Health Econ
Citation Key8354
PubMed ID26734757
PubMed Central IDPMC4761470
Grant ListR03 AG042874 / AG / NIA NIH HHS / United States
R03AG042874-01 / AG / NIA NIH HHS / United States