The Socio-Economic Heterogeneity of Health Insurance Coverage Expansion's Effects on Young Adults' Labor Supply: Evidence from the 2010 Affordable Care Act

Using data from the Medical Expenditure Panel Survey, I estimate health insurance expansion’s effects on young adults’ employment. One of the major policy changes under the Affordable Care Act in 2010 was to allow young adults to stay on their parent’s health insurance plan until the age of 26. This policy is unique since it's the first national level health insurance expansion that affects both high and low socio-economic groups. Thus, the policy change provides an opportunity to investigate whether all socio-economic groups are affected equally by a health insurance expansion. I use a difference-in-differences model to estimate the policy's labor supply effects among young adults in different socio-economic groups. 23-25-year-old young adults are the main treatment group, and 26-30-year-olds are the control group. The results suggest that the policy decreased labor supply among 23-25-year-old males by 8 percentage points. I also formally test and find evidence for the heterogeneity of the policy’s labor supply effect by socio-economic group. Among college educated men, the policy's effect on full-time employment and part-time employment are larger than on men without a college degree.