The Incentive Effects of Medicaid on Women's Labor Supply

This paper investigates Medicaid's impact on women's labor supply behavior while taking into account Medicaid's link to the AFDC program. The data were extracted from the 1986 Current Population Survey. A major finding is that Medicaid, valued as government-provided health insurance, has a significant negative impact on an average female head's probability of working. For instance, a 10 percent increase in Medicaid would reduce a head's probability of working by.9 to 1.3 percentage points. Contrary to expectations, Medicaid is found to have a generally insignificant effect on hours worked.