Association for Public Policy Analysis & Management

This study provides a systematic review of empirical evidence on the labour supply effects of health insurance. The outcomes in the 63 studies reviewed include labour supply in terms of hours worked and the probability of employment, self-employment and the level of formalisation. One of the key findings is that the current literature is vastly concentrated on the US. We show that spousal coverage in the US is associated with reduced labour supply of secondary earners. The effect of social assistance in the US on labour supply of its recipients is ambiguous with a mix of negative and statistically insignificant results. A tentative result is that dependent young adults in the US who can access health insurance via their parents’ employer have lower labour supply via fewer hours worked while keeping the same employment probability. The employment-coverage link is an important determinant of labour supply of people with health problems. The same holds for self-employment decisions. Universal coverage may create either an incentive or a disincentive to work depending on the design of the system. Finally, evidence on the relationship between health insurance and the level of economic formalisation in developing countries is fragmented and limited.