Labor Force Participation and Health Insurance Coverage

A Dynamic Interaction

Catherine McLaughlinEconomic Research Initiative on the Uninsured

University of Michigan

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Worker Take-up Rates, By Gender

50

55

60

65

70

75

80

85

90

1987 1996 1999 2000

FemaleMale

Data: NMES 1987, MEPS 1996 and 1999, CPS 2000

Worker Take-up Rates, By Gender, Marital Status, Kids

50

55

60

65

70

75

80

85

90

Mar/Kids Mar/NoKids Single/Kids Single/NoKids

FemaleMale

Data: CPS 2000

Worker Offer Rates, By Gender, Marital Status, Kids

50

55

60

65

70

75

80

85

90

Mar/Kids Mar/NoKids Single/Kids Single/NoKids

FemaleMale

Data: CPS 2000

% Decliners who are Uninsured, By Marital Status, Kids, and Gender

0

10

20

30

40

50

60

70

80

Single Workers Single Workers w/Children

Married Workers Married Workersw/ Children

FemaleMale

Source: CTS, 1996

Questions for policymakers

• What influence does the availability of a group policy have on labor supply decisions of individual workers?– Entry or exit

• Retirement, back to school, staying home

– Full time or part time– Seasonal or temporary– Occupation and industry

What we know about labor force participation and coverage

• Health insurance is a central determinant of retirement decisions by men– Size of effect not known– Effect on women not known

Source: Gruber and Madrian, 2002

What we think is likely about labor force participation and coverage

• Health insurance is an important factor in the labor supply decisions of secondary earners

What is possible, but there is disagreement in the field

• Health insurance is not a major determinant of the labor supply and welfare exit of low income mothers

• Health insurance plays an important role in job mobility decisions