Effects of health insurance on labour supply: A systematic review
Nga Leopold, Wim Groot, Sonila Tomini & Florian Tomini
#2017-017
This study provides a systematic review of empirical evidence on the
labour supply effects of health insurance. The outcomes in the 63
studies reviewed include labour supply in terms of hours worked and the
probability of employment, self-employment and the level of economic
formalisation. One of the key findings is that the current literature is
vastly concentrated on the US. We show that spousal coverage in the US
is associated with reduced labour supply of secondary earners. The
effect of Medicaid in the US on labour supply of its recipients is
ambiguous. However we have initial evidence of labour supply distortion
caused by Children's Health Insurance Program, Affordable Care Act and
other public health insurance expansions. A tentative result is that
dependent young adults in the US who can access health insurance via
their parents' employer have lower labour supply through fewer hours
worked while keeping the same employment probability. The
employment-coverage link is an important determinant of labour supply of
people with health problems. The same holds for self-employment
decisions. Universal coverage may create either an incentive or a
disincentive to work depending on the design of the system. Finally,
evidence on the relationship between health insurance and the level of
economic formalisation in developing countries is fragmented and
limited.
Keywords: health insurance, labour supply, labour market
JEL Classification: I13, J22