The Relationship between Health Insurance and Labor Force Decisions : An Analysis of Married Women

Understanding family decision making regarding health insurance and labor supply is of particular importance for investigating the effects of policy proposals to improve access to health insurance coverage for workers and their families. In this paper, we estimate a model of labor supply (full time work, part time work or no work) and job choice (the choice of a job that offers health insurance) on a sample of married women from the 1987 National Medical Expenditure Survey (NMES). We use a simultaneous framework that controls for the endogenous probability that the husband is offered insurance. This approach addresses biases that may arise when estimating the propensity to be offered insurance on a selected sample of working married women. In addition, it controls for the effect of part-time and full-time work status on offer propensities. We find evidence that health insurance affects both the wife's labor supply and job choice decisions. Women whose husbands are not offered insurance are more likely to work than other women and are more likely to work in jobs providing health insurance