Medicaid Benefit Generosity and Labor Market Outcomes

Abstract

This paper examines whether Medicaid adult vision coverage affects labor market activity by using state-by-year changes to these benefits. We find that vision benefits increase hours worked and occupational skill requirements, but no consistent evidence of changes on the extensive employment margin. Intensive margin effects could be facilitated by decreased barriers to transportation—when a state covers vision services, beneficiaries are more likely to commute to work by car or motorcycle rather than other modes. Our study suggests that, conditional on eligibility, Medicaid can have a positive effect on labor market activity by expanding access to services that enable work.