Social Sciences, Microeconomics and Decision Sciences; Affordable Care Act; access to care; co-residence; labor supply; medical expenditure
This paper investigates the effects of Inter-generational co-residence on health care market, and labor market outcomes, to see whether or not living under the same roof with at least one parent matters in health care market, and labor market behaviors in post-Affordable-Care Act (ACA) USA. The adopted analytical strategy involves not only looking at the gender differences in co-residence, and its effects on outcomes in the two markets, but also accounting for co-residence endogeneity following the recent literature. Unlike the recent literature that relies on instrumental variables methods, this study adopts a switching regression approach, defining inter-generational co-residence as an endogenous selection process using a binary probit equation, and modeled jointly with the extensive margins and intensive margins in the two markets. This novel approach results in a recursive trivariate probit model for each market, and estimated using penalized maximum likelihood methods. The results suggest that ACA by reorganizing the US health care market, seems to have reduced significantly disparities in health care access among males and females based on race, region of residence, place of birth, and citizenship. However not only do we observe significant differences in inter-generational co-residence status between males and females, we also find significant inequalities in the effects of co-residence on health care market, and labor market outcomes. In fact, co-residence is found to increase health care expenditure by 56.7% among females, while this figure increases to 74.2% among males. In addition co-residing individuals, while spending 69.7% more on health care annually are 1.22 times more likely to access health care, but 31% less likely to use health care intensively during the year. In the labor market, co-residence is found to reduce significantly hours of weekly labor supplied by 41% for females, and 55.6% for males. Furthermore co-residing individuals, while not significantly different in their likelihood of labor force participation, are 1.52 times less likely to work full time once they decide to participate, and also spend about 55.4% less time working in the labor market in post-ACA USA.