The medicaid notch, labor supply, and welfare participation: Evidence from eligibility expansions

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152 Scopus citations


I assess the impact of losing public health insurance on labor market decisions of women by examining a series of Medicaid eligibility expansions targeted toward young children. These targeted expansions severed the historical tie between AFDC and Medicaid eligibility. The reforms allowed a mother’s earnings to increase without losing public health insurance for her young children. Increasingthe income limit for Medicaid resulted in a decrease in AFDC participation and an increase in labor force participation among these women. The effects were large for ever married women, and negligible for never married women.

Original languageEnglish
Pages (from-to)909-939
Number of pages31
JournalQuarterly Journal of Economics
Issue number4
StatePublished - Nov 1995

Bibliographical note

Funding Information:
University of California, Los Angeles; University of California, Santa Barbara; University of California, Santa Cruz; and Yale University for helpful comments. Lawrence Katz and an anonymous referee provided extremely useful comments that led to a substantially improved paper. In addition, Janet Currie, David Cutler, Peter Diamond, Leora Friedberg, Jerry Hausman, Caroline Minter Hoxby, Hilary Hoynes, Mark McClellan, Lucia Nixon, Joseph Newhouse, JOrn-Steffen Pischke, Andrew Samwick, Douglas Staiger, Duncan Thomas, and especially Jonathan Gruber, Brigitte Madrian, and James Poterba provided insightful comments. I would like to thank the National Bureau of Economic Research Health and Aging group for use of their excellent computing facilities and the National Institute of Aging for financial support.

ASJC Scopus subject areas

  • Economics and Econometrics


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