The Effects of Medicaid Expansion on Labor Market Outcomes: Evidence from Border Counties

This paper provides new empirical evidence on the employment and earning effects of the recent Medicaid expansion. Unlike most existing studies that use a conventional state and year fixed effects approach, our main identification strategy is based on the comparison of employment and wages in contiguous county-pairs in neighboring states (i.e. border counties) with different Medicaid expansion status. Using the 2008-2016 Quarterly Census of Employment and Wages, we estimate a set of distributed lag models in order to examine the dynamic effects of Medicaid expansion. Results from our preferred specification suggest a small but statistically significant decrease in employment of 1.3 percent one year after the Medicaid expansion. This disemployment effect is transitory and appears to primarily occur in low-wage sectors. In particular, employment returns to pre-expansion levels within two years. We also do not find any statistically significant effect of the Medicaid expansion on wages at any point.