Association for Public Policy Analysis & Management

Abstract: Previous research demonstrates that the Medicaid expansions of the 1980s and 1990s had lasting effects on the health, education and labor market outcomes of children. Yet to date there has been no direct test of the effect of Medicaid expansions on intergenerational economic mobility. Using new commuting zone level estimates of economic mobility for children born between 1980 and 1993, we exploit the uneven expansions of Medicaid eligibility across states to isolate the causal effect of this policy change on mobility outcomes. Regression models using simulated state-year specific eligibility criteria as an instrument for expanding coverage demonstrate that increasing the proportion of women aged 15-44 eligible for Medicaid is associated with a reduction in the correlation between the income ranks of parents and their children in adulthood. We further find the Medicaid expansions increased upward mobility for children born to low-income parents and not for children from higher-income households. These findings suggest early exposure to health insurance may be a key policy lever for promoting intergenerational mobility and economic opportunity.