2021/09/19 by Jeffrey Clemens, Michael Wither · 1 voice
Business, Management and Accounting · Economics, Econometrics and Finance · Medicine · Social Sciences · #Business #Demographic economics #Economic growth #Economics #Environmental health #Financial Literacy, Pension, Retirement Analysis #Gender, Labor, and Family Dynamics #Health care #Healthcare Policy and Management #Labour economics #Low wage #Medicaid #Medicine #Minimum wage #Safety net #Survey of Income and Program Participation #Wage #Welfare #Welfare reform #Work (physics)
paper · doi:10.1002/soej.12530
openalex publication_date 2021/09/19 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/10
Abstract Interactions between redistributive policies can confront low‐income households with complicated choices. We study one such interaction, namely the relationship between Medicaid eligibility thresholds and the minimum wage. A minimum wage increase reduces the number of hours a low‐skilled individual can work while retaining Medicaid eligibility. We show that the empirical and welfare implications of this interaction can depend crucially on the relevance of labor market frictions. Absent frictions, affected workers may maintain Medicaid eligibility through small reductions in hours of work. With frictions, affected workers may lose Medicaid eligibility unless they leave their initial job. Empirically, we find that workers facing this scenario became less likely to participate in Medicaid, less likely to work, and more likely to spend time looking for new jobs, including search while employed. The observed outcomes suggest that low‐skilled workers face substantial labor market frictions. Because adjustment is costly, tinkering with safety net program parameters that determine the location of program eligibility notches can be harmful to beneficiaries.