Employer-Provided Health Insurance and Labor Supply of Married Women

Authors

Merve Cebi, University of Massachusetts Dartmouth and W.E. Upjohn Institute for Employment ResearchFollow

Series

Upjohn Institute working paper ; 11-171

**Published Version**

In Eastern Economic Journal 39(4): 493-510

DOI

10.17848/wp11-171

Issue Date

March 2011

Abstract

This work presents new evidence on the effect of husbands’ health insurance on wives’ labor supply. Previous cross-sectional studies have estimated a significant negative effect of spousal coverage on wives’ labor supply. However, these estimates potentially suffer from bias due to the simultaneity of wives’ labor supply and the health insurance status of their husbands. This paper attempts to obtain consistent estimates by using several panel data methods. In particular, the likely correlation between unobserved personal characteristics of husbands and wives—such as preferences for work—and potential joint job choice decisions can be controlled by using panel data on intact marriages. The findings, using data from the National Longitudinal Survey of Youth and the Current Population Survey, suggest that the negative effect of spousal coverage on labor supply found in cross-sections results mainly from spousal sorting and selection. Once unobserved heterogeneity is controlled for, a relatively smaller estimated effect of spousal coverage on wives’ labor supply remains.

Subject Areas

LABOR MARKET ISSUES; Wages, health insurance and other benefits; Health insurance