The Role of Health and Health Insurance in Labor and Marriage Markets

This dissertation examines the role of individual health and health policy in the labor market and the marriage market. Health status and health policy can interact to influence labor supply decisions. For example, individual health affects demand for health insurance coverage, which, in the U.S., is linked to employment. In the first chapter, I analyze how single mothers' labor supply reacts to changes in health insurance availability. The Patient Protection and Affordable Care Act (PPACA) substantially expands Medicaid eligibility and introduces health insurance subsidies. This health care reform changes work incentives since eligibility for these programs depends on income and earnings. In the first chapter, I simulate the employment effects of PPACA among single mothers, who, along with their children, are the main beneficiaries of Medicaid. To assess these employment effects, I estimate a structural model of labor supply of individuals who can obtain health insurance through their employer. Alternatively, they may be eligible for Medicaid coverage. I estimate the model exploiting exogenous variation in Medicaid policies across states and using data from the Medical Expenditure Panel Survey. Then I use the estimated preference parameters to simulate single mothers' employment choice under health care reform. The simulation results show that single mothers are about six percent more likely to participate in the labor force due to PPACA. They also increase their labor supply from part-time to hill-time work by about five percent. Moreover, I find crowding-out of employer-sponsored health insurance of about 40 percent in this population. The value that single mothers place on PPACA benefits offsets the increased costs to the government, so the reform is welfare improving.;In the second chapter, I explore in more detail the reduced-form effects of recent Medicaid expansions on labor market outcomes of single mothers. Since Medicaid eligibility depends on earnings, it is endogenous in a labor supply regression. To obtain consistent estimates of the effect of Medicaid on labor supply, I use two different identification strategies. First, I instrument Medicaid coverage with policy parameters determining eligibility. Second, I use simulated eligibility measures in a triple-differences regression. Single childless women serve as a control group since they are never eligible for Medicaid. Both sets of results indicate that expanded Medicaid availability does not lead to a decrease in labor supply. An important concern when using cross-state variation in policies is potential migration in response to these policies. Comparing migration flows of single mothers and childless single women shows that, differences in Medicaid rules are not a driver of migration.;Health also plays a role in the marriage market. There is evidence that individual select into marriage based on health status. Therefore, individuals can affect their marriage market outcomes by improving their health. This is the topic of the third chapter: I test whether individuals invest more in their health when it is harder to find a spouse. Costly health investments make individuals more attractive to their potential future spouse, thereby increasing the likelihood of entering marriage. However, the likelihood of finding a spouse also depends on the relative numbers of men and women. When it is very easy or nearly impossible to become married, we expect lower levels of health investment. In a situation where marriage is likely but not certain, however, individuals can use healthy behavior to increase the probability of finding a spouse.;In contrast to the common one-dimensional marriage market ratio based on the age difference between men and women, I also account for variation in age differences across couples of different races. I introduce a new measure, which uses both estimated racial composition of couples and age differences between spouses to weight cohort sizes in a two-dimensional version of the marriage market ratio. I test the hypothesis that the marriage market ratio affects the health-related behaviors smoking, drinking, and exercising. The results indicate that men and women of all races are less likely to smoke and black men and women are less likely to drink when facing unfavorable marriage market, conditions.