Description:

Maria Polyakova (Stanford University): "Health Insurance as Economic Stimulus? Evidence from Long-Term Care"

Abstract: We examine the aggregate economic effects of health insurance expansions using Germany’s 1995 introduction of public long-term-care insurance. Taking advantage of administrative labor market data and regional variation in coverage, we find that insurance expanded the long-term-care sector, raised economy-wide labor force participation, and lowered unemployment, especially benefiting lower-skilled workers. A marginal value of public funds analysis suggests that these labor market gains generated large positive returns. Embedding our estimates in a general equilibrium model, we show that the welfare effects of expanding public health insurance depend on labor market frictions, highlighting the broader economic stakes of health policy
design.