Spousal Labor Market Effects from Government Health Insurance: Evidence from a Veterans Affairs Expansion

was offered (whether or not they formally enrolled) because they could sign up at
any time if coverage was needed. Therefore even if they were not formally
insured, they were insured in an economic sense, and thus were treated in the first
stage. However, if some veterans were unaware of the insurance, our results will
provide an underestimate of the behavioral effect of full government coverage. ¹²

The third assumption would be violated if something else besides this
expansion affects veterans and non-veterans or their wives differentially. Policy
changes in 1996-1997 such as welfare reform are unlikely to affect older male
veterans and their wives differently than older male non-veterans and their wives.
Finally, unobserved systematic differences between the treatment and control
groups could cause the treatment and control to trend differently in the post-
period. However, we find no evidence of pre-existing trends using pre-policy
years as a falsification exercise. Additionally, results are very similar when the
model is fully interacted with veteran.

IV. Results

First, we demonstrate that the VA expansion had a direct negative effect
on the labor supply of married men. Table 2, Panel I provides the effects from

¹² According to a 2001 survey, 22% of unenrolled veterans said they were unaware of the program
(Department of Veterans Affairs, 2002b).

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