Ekonomski Anali (Jan 2021)

Labour market returns to health capital during childhood: Evidence from Medicaid introduction

  • Noghanibehambari Hamid

DOI
https://doi.org/10.2298/EKA2129099N
Journal volume & issue
Vol. 66, no. 229
pp. 99 – 118

Abstract

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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.

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