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

As access to public health insurance increases, it is important to consider
the impact of publicly-provided care on household labor. For workers
approaching the age of retirement, it is particularly important to consider how
public insurance expansions will alter the retirement and work decisions of the
household. From previous work (Boyle and Lahey 2010), we know that for men
between the ages of 55 and 64, the probability of leaving the labor force increases
3.33% upon receipt of government-provided health insurance. However, although
government expansion of health insurance to older workers decreases labor
supply for those workers, there may be positive or negative spillover effects on
the labor supply of affected spouses who are not covered by the programs.

The effect of publicly-provided healthcare receipt on a spouse’s labor
supply is not theoretically clear cut. There are several factors that are important
to consider. In theory, household labor supply should decrease with the effective
income shock from publicly-provided health insurance, but that labor supply
reduction may not be borne equally by all members of the household. Because
older wives generally have more flexible work options than their husbands, they
may increase their work hours or enter the labor force part time once their
husbands drop out of the labor force. If a husband’s job has provided health
insurance for his wife and he is offered public health insurance for himself, it may
make sense for the wife to seek or retain employment options that allow her to

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