The effect of state dependent mandate laws on the labor supply decisions of young adults

Abstract

Prior to the Affordable Care Act, the majority of states in the U.S. had already implemented state laws that extended the age that young adults could enroll as dependents on their parent's employer-based health insurance plans. Because of the fundamental link between health insurance and employment in the U.S., such policies may effect the labor supply decisions of young adults. Although the interaction between labor supply and health insurance has been extensively studied for other subpopulations, little is known about the role of health insurance in the labor supply decisions of young adults. I use the variation from the implementation and changes in state policies that expanded dependent health insurance coverage to examine how young adults adjusted their labor supply when they were able to be covered as a dependent on their parent's plan. I find that these state mandates led to a decrease in labor supply on the intensive margin.

Keywords: Affordable Care Act; Health insurance; Labor supply; State Insurance Mandates; Young adults.