Association for Public Policy Analysis & Management

Low-income families in the U.S. may be eligible for many government transfer programs that have varying eligibility criteria, creating highly non-linear budget constraints for these families. As a result, eligibility and participation may interact across programs and with labor supply, but little is known about these interactions despite the potential for important labor market and budgetary effects. In this paper, I examine the effects of expansions of Medicaid eligibility on participation in other government programs and on labor supply. I use a simulated instrument to capture plausibly exogenous variation in Medicaid eligibility thresholds induced by Federal Medicaid expansions in the late 1980s and early 1990s, and expand on previous literature with several tests of the robustness of this instrument. Preliminary results suggest that Medicaid expansions do affect participation in other transfer programs: a 10% expansion in Medicaid eligibility decreases the percent participating in any other program by 1%, and reduces the total dollar receipt from all programs by around $100 per family. In addition, a 10% expansion in Medicaid eligibility increases average family weekly hours worked by 1, with an increase of 0.7 hours per week by adults in the family and an increase of 0.3 hours per week by teens. These labor supply effects suggest that expansions of public health insurance may reduce reliance on other transfer programs and increase labor supply, potentially offsetting part of the costs of the expansion.