Academic journal article Contemporary Economic Policy

Health Insurance and Labor Force Participation: What Legal Recognition Does for Same-Sex Couples

Academic journal article Contemporary Economic Policy

Health Insurance and Labor Force Participation: What Legal Recognition Does for Same-Sex Couples

Article excerpt

I. INTRODUCTION

Married couples in the United States have different labor force participation rates than unmarried couples. According to 2000-2011 Current Population Survey (CPS) data, 27% of married couples have one member in the labor force and one not in the labor force, while this is true for only 22% of unmarried opposite-sex couples. Married couples are also much more likely to be able to receive insurance through a spouse's employer. Over 65% of married couples take advantage of the ability to receive insurance through a spouse's employer, while only 7% of unmarried couples report one member having health insurance through the other's employer. The ability to receive health insurance through a spouse's employer could allow couples more flexibility in the labor market, but the difference in labor force participation rates could also reflect that a certain type of couple selects into marriage. Since couples choose whether or not to get married, we cannot simply compare married couples to unmarried couples. In this paper, I study how labor force participation and health insurance coverage change for same-sex couples after they can enter into legal recognition through marriage, civil unions, and domestic partnerships.

Although for opposite-sex couples marriage has many economic benefits, most of the economic benefits of marriage have been denied to same-sex couples due to the Defense of Marriage Act, a federal law that limited federal recognition of same-sex couples. (1) However, many same-sex couples have had their health insurance options change because these new forms of legal recognition mean that most employers who offer health insurance to opposite-sex spouses have to offer health insurance to same-sex spouses as well. Thus, allowing same-sex couples to enter into legal recognition can affect their labor force participation because now only one spouse needs to be working full-time to provide both members of the couple with health insurance.

To examine empirically how same-sex couples respond to legal recognition, I use data from the March CPS from 1996 to 2011 to implement a triple-difference estimation strategy. The first difference compares how labor force participation and health insurance coverage change after states extend legal recognition. This accounts for initial state differences. The second difference is how these variables have changed over time in states that do not extend legal recognition. Comparing how labor force participation and health insurance change in states that do not extend legal recognition is important because some companies have begun to offer health insurance benefits to same-sex partners even when not required to do so by state governments. This might result in a false rejection of the null hypothesis of no effect if I simply compared same-sex couples before and after legal recognition. The third difference is how these two differences change between same-sex couples and married opposite-sex couples. Using married opposite-sex couples as a within-state control group is important because many states have instituted policies aimed at increasing insurance coverage for everybody as the uninsured population has become a bigger policy focus.

Because properly identifying same-sex couples can itself be a challenging task, I pay special attention to the data and take advantage of a recently added question in the CPS to help identify same-sex couples. The treatment group is all cohabiting same-sex couples instead of only those who choose to enter into marriage or other legal unions. This is required because of the structure of the data, but it also helps avoid endogeneity issues associated with which same-sex couples choose to enter into legal recognition. I focus on couples where both members are between the ages of 30 and 65 because people older than 65 are eligible for Medicare and because many states and the federal government passed legislation that extends dependent coverage to young adults through their parents' employers. …

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