Three Essays on the Interplay between Social Insurance, Transfer Programs and Labor Markets

My dissertation explores how social insurance and public assistance programs affect individual and firm decision making, with a particular focus on their implications for the labor market. The three chapters of my dissertation investigate in various contexts how unexpected deterioration in health or low initial health endowments affect individual and household employment and well-being, what private and public resources people draw upon in those events, and how the design of social insurance and public transfer programs - programs which aim to palliate the risks of unexpected income loss - affect these outcomes in intended and unintended ways. The first chapter “Paying for Disability Insurance?: Firm cost sharing and its employment consequences,” joint work with Salla Simola, offers the first empirical evidence on the employment consequences and trade- offs of tying a firm’s Disability Insurance (DI) tax payments to the DI claims of the firm’s own workers. The evidence comes from a reform in Finland that increased employer DI co- insurance rates while decreasing (non-experience rated) payroll taxes. The reform applied to some firms but not others, and to varying degrees. The evidence indicates that among firms bearing higher costs of DI claims by their own employees, (i) DI receipts of their employees declined, (ii) the composition of new hires shifted away from higher-disability-risk groups, and (iii) among current employees the expected gains from increased sustained employment exceed the declines in expected DI receipts. The second chapter “Supplemental Security Income and Child Outcomes: Evidence from Birth Weight Eligibility Cutoffs ,” joint work with Melanie Guldi, Jeff Hemmerter and Lucie Schmidt, examines whether income transfers in the form of Supplemental Security Income (SSI) payments for children with disabilities can help close the gap in outcomes due to this initial health and environmental disadvantage. Low birth weight infants born to mothers with low educational attainment have a double hurdle to overcome in the production of human capital. We exploit a discontinuity in SSI eligibility at 1200 grams and use a regression discontinuity approach to produce causal estimates of the effects of SSI eligibility. We find that eligibility increases disability benefit participation, improves child outcomes and parenting behaviors, and shifts maternal labor supply from full to part time. The third chapter “Do Medicaid Expansions Affect Supplemental Security Income Disability Benefit Take-Up?” investigates the effects of expanding Medicaid coverage on the demand for and use of the Supplemental Security Income (SSI) program. SSI provides two major benefits to recipients: (1) a cash transfer and (2) categorical eligibility for Medicaid, in most states. Ex-ante the effects of Medicaid expansion on SSI are ambiguous. On the one hand, public health insurance coverage may drive the decision to obtain SSI benefits. Hence, by providing Medicaid coverage through other pathways, a Medicaid expansion could decrease SSI applications. On the other hand, successful SSI applications have a doctor’s diagnosis of a disabling condition. A Medicaid expansion may facilitate the SSI application process and increase SSI applications/beneficiaries. This paper uses changes across states and over time to the Medicaid and the State Children’s Health Insurance Program (SCHIP) income eligibility rules to estimate the causal impact of health insurance eligibility on SSI receipt. I estimate that Medicaid eligibility increases the likelihood of SSI participation by 0.5 percentage points for children but has no discernible effect for parents.PhDEconomicsUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttps://deepblue.lib.umich.edu/bitstream/2027.42/151401/1/aaehawki_1.pd