[ NTA logo ]

The Affordable Care Act, Labor Supply, and Social Welfare

Jane G. Gravelle and Sean Lowry

Abstract:

This paper converts Congressional Budget Office estimates of the labor supply effects of the Affordable Care Act (ACA) into social welfare effects for each of the major individual provisions of the law. The sum of these negative, individual welfare effects can be reduced, almost to zero, by utilizing alternative assumptions about labor supply elasticities and the ability of individuals to perceive changes in marginal tax rates. Incorporation of previous estimates of the welfare-enhancing aspects of the ACA would likely outweigh the small, negative (and possibly negligible) welfare losses caused by the law’s labor supply distortions.

Citation

Jane G. Gravelle and Sean Lowry (2016), The Affordable Care Act, Labor Supply, and Social Welfare, National Tax Journal, 69:4, pp. 863-882

DOI: doi.org/10.17310/ntj.2016.4.07