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Labour Market Returns To Health Capital During Childhood: Evidence From Medicaid Introduction

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  • Hamid NoghaniBehambari

Abstract

Health capital development during childhood can affect later-life outcomes. This paper examines the long-term effects of the introduction of Medicaid during the 1960s as one of the earliest attempts in US history to provide publicly financed health insurance for the poor. Using a large panel dataset and a difference-in-differences-in-differences identification strategy, I show that exposure to Medicaid during ages 0–5 has sizable and significant effects on economic and non-economic outcomes throughout ages 25–55, including income, employment, education, disability, and wealth. Exposure to Medicaid among fully eligible cohorts is associated with roughly 0.4 percentage higher wage income, equivalent to an increase of $145 above the mean of annual wages. It also implies a minimum of 7.8% externality of the programme in labour market wages.

Suggested Citation

  • Hamid NoghaniBehambari, 2021. "Labour Market Returns To Health Capital During Childhood: Evidence From Medicaid Introduction," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 66(229), pages 99-118, April – J.
    • Handle: RePEc:beo:journl:v:66:y:2021:i:229:p:99-118
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    References listed on IDEAS

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    1. Currie, Janet & Grogger, Jeffrey, 2002. "Medicaid expansions and welfare contractions: offsetting effects on prenatal care and infant health?," Journal of Health Economics, Elsevier, vol. 21(2), pages 313-335, March.
    2. Almond, Douglas & Currie, Janet, 2011. "Human Capital Development before Age Five," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 15, pages 1315-1486, Elsevier.
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    More about this item

    Keywords

    Medicaid; human capital; labour market; income; education; health capital; public insurance;
    All these keywords.

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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