Health Care Reform and Labor Supply of Older Workers: Employment Lock and Retirement

Junghyun Kwon, Boston College

This paper exploits the features of Massachusetts healthcare reform in 2006 to provide evidence on the labor market effects from the reform. Using data from the March Current Population Survey, I employ a difference-in-differences method and compare labor market behaviors of males aged 55-64.residing MA and residents in other states in Northeast region before and after the reform. I find that older workers are significantly more likely to remain in the labor market after the health reform, and retirement hazard declined significantly. This employment lock effect is stronger among more educated, and higher income population. This result suggests some possibility positive income effects from the availability of public insurance from Medicaid expansion in labor supply decision. Since the MA health care reform has many similar feature with current health care reform , the results suggest possible labor supply behavior change after the Affordable Care Act reform starting 2014.