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



acquire her own employer-provided insurance, such as by increasing her hours to
full-time or obtaining a new job with health insurance coverage. On the other
hand, husbands and wives may make joint retirement decisions, which would
increase the attractiveness of reducing hours for wives (Coile 2004).

Previous research that has examined the effect of health insurance receipt
on spousal labor supply has generally found negative effects of husbands’ health
insurance availability on wives’ labor supply (Abraham and Royalty 2006,
Buchmueller and Valletta 1999, Kapinos 2009, Murasko 2008, Olson 1998).
However, this research focuses on the effect of health insurance availability that
can cover the entire family and not just the plan participant. The theoretical
implications of this type of policy change, similar to extending COBRA or
providing universal healthcare, are different than for a policy which only covers
one specific member of the household. In these previously studied cases, the wife
will have less of an incentive to increase labor supply (even when her husband
previously provided the family’s health insurance) because she will not need to
provide health insurance for the family. Additionally, this literature tends to focus
on younger age groups, who may be more attached to the labor force than those
ages 55 and older. Some of this literature also has problems with positive
marriage selection—“high quality” husbands are more likely to have both health
insurance and “high quality” wives with their own labor force attachment.
However, the main findings still hold even when this endogeneity is corrected for



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