Essays in Applied Microeconomics

Abstract

In Chapter 1, I study how asset test elimination of Medicare Savings Programs affect elderly seniors financial difficulty to access health care. In the United States, most elderly seniors are covered by Medicare. However, the original Medicare could incur non-negligible and uncapped out-of-pocket expenditure to the beneficiaries, which could make health care still unaffordable. Medicare Savings Program (MSP) is a Medicaid program that help eligible Medicare beneficiaries to pay their Medicare share cost. Asset test is often the major hurdle to block income eligible seniors to enroll in MSP. Ten states have eliminated the asset test in MSP. I use difference in difference approach to estimate that removing the asset test in MSP increased elderly seniors' Medicaid coverage rate by 19 percent and reduce their financial difficulty to access health care by 8 percent at extensive margin. Event study result shows that in average it took 3 years for the effect to take off. States should consider removing the asset test or make it less restrictive if doing so will make health care more accessible to elderly seniors and reduce states' administrative cost burden. In Chapter 2, I study how Medicare eligibility at age 65 reduced people's incentive to get Medicaid divorce. To get a divorce, split the joint assets, and allocate most of the assets to the healthy spouse is a strategy to help the sick spouse financially qualify for Medicaid coverage. The exogenous age-based increase in eligibility for Medicare and Medicaid reduces the incentive for people crossing the 65-threshold to implement Medicaid divorce. Using regression discontinuity design, I estimate a 4.1 percent discrete decrease in the prevalence of divorce at the 65-threshold. By examining how the magnitude of the divorce gap is associated with the state-level variation in Medicaid asset test, I argue that the divorce gap at age 65 measures the reduction in Medicaid divorce. In addition, the heterogeneity analysis indicates that the divorce gap is significantly larger for women, which suggests that Medicaid divorce is more prevalent when the sick spouse is the wife. In Chapter 3, I study the relationship between technological change and local labor markets. Between 2000 and 2006, the U.S. economy was expanding and the housing market exhibited prosperity. I examine the heterogeneous effect of the housing boom and the Routine Biased Technological Change (RBTC) on the occupational composition of the U.S. labor market during this period. All 3-digit occupations are classified into eight groups based on their task measures and education requirements. I find that the local housing boom boosted the overall local employment level, while the effect of RBTC was concentrated on low-skill occupations. Among the low-skill occupations intensive in routine tasks, the local housing boom increased the local employment share in office administrative support occupations, but had no significant effect on production occupations. At the same time, the RBTC was shifting the low-skill labor force away from these routine occupations to low-skill local service jobs. Moreover, the production workers were losing jobs even when the economy was good, while the employment share in local service occupations maintained strong even after the housing bubble burst.