« Back to Results
Marriott Philadelphia Downtown, Meeting Room 414
Hosted By:
Econometric Society
Americans ages 50 and older. Using data from the Health and Retirement Study and the Medical
Expenditure Panel Survey, we estimate a dynamic programming model of retirement that
accounts for saving, health insurance, and how different health insurance plans affect medical
expense risk. Importantly, we model the two key channels by which health insurance rates are
predicted to change: the Medicaid expansion and the subsidized private exchanges. Previous
research has suggested that access to Medicare health insurance significantly increases the
likelihood of retirement, but the recent Medicaid expansions under the ACA had little impact on
employment. We use the model in an attempt to reconcile these differing results. An important
reason that the ACA Medicaid expansions had little impact on employment is potentially that
many individuals who took up Medicaid were low income individuals receiving "implicit
insurance" from other sources before the reform, such as community health centers. However,
these forms of insurance are less available to higher income individuals, who are impacted by
availability of Medicare when they turn 65. Thus the differing pieces of evidence suggests that
access to government provided insurance has differing effects along wage distribution. Evidence
from MEPS is consistent with this hypothesis. We build these facts into the dynamic model to
assess the quantitative importance of these facts for understanding the employment effects of the ACA. Our model is complex, and thus we solve the model using graphical processing units
(GPUs) on a computing cluster. We estimate the model using the method of simulated moments.
The Effect of Taxes and Transfers on Labor Supply, Savings, and Health Insurance
Paper Session
Friday, Jan. 5, 2018 8:00 AM - 10:00 AM
- Chair: Petra Todd, University of Pennsylvania
The Effect of the Affordable Care Act on the Labor Supply, Savings, and Social Security of Older Americans
Abstract
This paper assesses the effect of the Affordable Care Act (ACA) on the labor supply ofAmericans ages 50 and older. Using data from the Health and Retirement Study and the Medical
Expenditure Panel Survey, we estimate a dynamic programming model of retirement that
accounts for saving, health insurance, and how different health insurance plans affect medical
expense risk. Importantly, we model the two key channels by which health insurance rates are
predicted to change: the Medicaid expansion and the subsidized private exchanges. Previous
research has suggested that access to Medicare health insurance significantly increases the
likelihood of retirement, but the recent Medicaid expansions under the ACA had little impact on
employment. We use the model in an attempt to reconcile these differing results. An important
reason that the ACA Medicaid expansions had little impact on employment is potentially that
many individuals who took up Medicaid were low income individuals receiving "implicit
insurance" from other sources before the reform, such as community health centers. However,
these forms of insurance are less available to higher income individuals, who are impacted by
availability of Medicare when they turn 65. Thus the differing pieces of evidence suggests that
access to government provided insurance has differing effects along wage distribution. Evidence
from MEPS is consistent with this hypothesis. We build these facts into the dynamic model to
assess the quantitative importance of these facts for understanding the employment effects of the ACA. Our model is complex, and thus we solve the model using graphical processing units
(GPUs) on a computing cluster. We estimate the model using the method of simulated moments.
An Analysis of the Australian Social Security System Using a Life-cycle Model of Labor Supply with Asset Accumulation and Human Capital
Abstract
The Australia social security system consists of a defined contribution pension scheme plus a safety net for low income elderly (known as the aged pension). It has been rated as one of the world's best designed systems by several NGOs. In this paper we examine the effects of various potential changes in the design of the system on labour supply and consumption over the life-cycle, the timing of retirement, and bequests. To capture labor supply effects on both the intensive and extensive margins we use a structural dynamic model of labour supply and consumption-savings decisions in presence of human capital accumulation. The model is estimated on the Australian HILDA panel. In counterfactual experiments we examine effects of changes in the generosity of the aged pension and in the rules of the defined contribution scheme (such as the matching rate and means testing rules). We also quantify the differences between the effects of anticipated and unanticipated policy changes, and study how the effects of the latter vary with the age of the agent when the new policy is put in effect.The Effect of Cash and In-kind Taxes and Transfers on the Labor Supply of the United States Low Income Population With Endogenous Participation Choice
Abstract
We use several waves of the U.S. Survey of Income and Program Participation to model the effects of changes in taxes and transfers in the safety net on labor supply. We first provide new and detailed calculations of the benefit schedules of all major transfer programs and demonstrate that the cumulative marginal tax rate from participating in most combinations of programs has steadily declined over time. We then specify a structural model of labor supply to estimate the effect of this decline on work effort. Our model allows the choice of which combination of programs to participate in to be endogenous and made simultaneously with the choice of labor supply. Our model also takes into account the in-kind nature of several of the major benefits and we show that this alters estimates of labor supply effects in a non-trivial manner.Discussant(s)
Zvi Eckstein
,
Tel Aviv University
Hanming Fang
,
University of Pennsylvania
Wilbert VanderKlaauw
,
Federal Reserve Bank of New York
Hamish Low
,
University of Cambridge
JEL Classifications
- J00 - General
- I1 - Health