February 2021

IZA DP No. 14089: The Effects of the Affordable Care Act Dependent Coverage Mandate on Parents' Labor Market Outcomes

Seonghoon Kim, Kanghyock Koh

We examine the labor market impacts of the Affordable Care Act dependent mandate (ACA-DM), which has significantly increased dependent children's health insurance coverage through parents' employer-sponsored health benefits. Using data from the American Community Survey, we find that the ACA-DM reduced parents' annual wages by about $2,600. However, the probability of employment and working hours only decreased marginally. The back-of-the-envelope calculation indicates that the magnitude of the estimated wage impact is similar to the increased insurance premium of a family plan due to the ACA-DM. These findings imply that a deadweight loss associated with the expansion of dependent health coverage is likely to be small as an increase in employers' labor costs is offset by a reduction in parents' wages without significant reductions in labor inputs.