Venue: The Fuqua School of Business, Duke University, 1 Towerview Drive, Durham, NC 27708-0120
Presentation
Onset of Parental Disability: The Effects of Health Insurance on Labor Supply and Family Income for Working Families with Children
We pool working families with children in the 1996 and 2001 panels of the Survey of Income and Program Participation (SIPP) to examine the effect of a worker having health insurance at the time of a new onset of disability on her subsequent work patterns and family income.
Starting with a sample of 41,349 individuals aged 25-58 at the beginning of each SIPP panel, we construct a sub-sample of 3,735 episodes of disability onset (across 2,896 families), defined as a case in which a person who was working in the previous month reports a new health condition that limits the amount or kind of work they can perform. Our primary dependent variables in this paper fall in two categories: 1) income drops and 2) work reductions. Our primary definition of an income drop consists of family income falling by at least 50% relative to the rolling average of family income in the preceding four months; we also require that this drop exists for at least 2 months to avoid reporting error. Our primary definition of a reduction in hours worked is a reduction to less than 20 hours of work or stopping work, where the reason listed for the change was health limitation.
We use both linear models and probit models to analyze the characteristics associated with these outcomes, with health insurance as the primary explanatory variable of interest. We extend the analysis to analyze whether being the policyholder of employer-provided insurance causes a form of job lock at onset of disability. That is, we explore whether ESI policy-holders are significantly less likely to reduce their hours worked or stop working following onset. A recent paper suggested that this effect existed for a subsample of married women diagnosed with breast cancer.
The next stage of the analysis will use hazard models to look at the duration of income drops and reductions in labor supply as a function of insurance status at the time of disability onset and other covariates.
We find that married workers, workers with higher levels of education, and higher levels of family income are less likely to experience disability onset. Blacks are more likely - and Hispanics are less likely - to experience disability onset; older workers are also more likely to experience a disability onset. Having health insurance at the time of disability onset reduces the likelihood of a significant drop in family income. Workers experiencing disability who hold a health insurance policy through their employer are less likely to cut back on hours worked or to leave work altogether than workers who are insured as dependents or through public insurance. This finding holds for the low-income subsample as well as the full sample, and after controlling for demographic, socioeconomic and geographic covariates. Duration analysis is underway and will be complete before the ASHE conference.