Modeling the Labor Market Effects of the Affordable Care Act

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Abstract/Contents

Abstract: This paper develops a simulation model to predict the labor market effects of the 2010 Affordable Care Act (ACA). Two provisions of the ACA—the expansion of state Medicaid programs and the creation of public health insurance exchanges—are likely to have significant effects on individual labor supply. This paper incorporates these new provisions into the budget constraint of the individual labor-leisure choice model in order to predict optimal work hours in response to the ACA. Using Central Population Survey (CPS) and premiums data to empirically estimate model parameters, I predict an -11.8% decrease in work hours after the ACA, and bunching before Medicaid and exchange subsidy eligibility thresholds. I also predict heterogeneous results for different demographic groups, with retirement age workers predicted to exhibit the largest decrease in work hours, and low-income workers previously eligible for Medicaid predicted to increase work hours. The model serves as a base for future policy simulation and complements a growing empirical literature base on the Affordable Care Act.

Type of resource	text
Date created	May 2016

Author	Dobos, Danielle
Primary advisor	Bhattacharya, Jayanta
Degree granting institution	Stanford University, Department of Economics

Subject	Affordable Care Act
Subject	Medicaid notch
Subject	simulation model
Subject	labor-leisure tradeoff
Subject	exchange subsidies
Subject	Stanford Department of Economics
Genre	Thesis

Location	https://purl.stanford.edu/ry176gm1864

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Preferred Citation: Dobos, Danielle. (2016). Modeling the Labor Market Effects of the Affordable Care Act. Stanford Digital Repository. Available at: https://purl.stanford.edu/ry176gm1864

Stanford University, Department of Economics, Honors Theses

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