The effect of the original introduction of Medicaid on welfare participation and female labor supply
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This paper uses the fact that states introduced Medicaid programs at different times between 1966 and 1972 to estimate Medicaid’s effect on Aid to Families with Dependent Children (AFDC) participation. Using state-level data, we find that the introduction of Medicaid accounted for approximately 10% of growth in AFDC caseloads from 1964 to 1974, a time period during which there was thought to be significant unexplained growth in caseloads. Analysis of individual-level data indicates that Medicaid’s effect on AFDC participation occurred through its effect in increasing the number of eligibles who participated in the program, and not because of increases in eligibility or reductions in workforce participation.
KeywordsMedicaid Welfare AFDC Labor supply
We thank Hope Corman for helpful comments on a previous draft of this paper. The findings and conclusions in this paper are those of the authors and do not necessarily represent the views of the Centers for Disease Control and Prevention.
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