QUARTERLY JOURNAL OF ECONOMICS
Medicaid is the biggest and most costly program that aids single mothers and their children. In 1994, $30.9 billion was spent on 24.8 million nonaged, nondisabled Medicaid recipients, a group that was predominantly single mothers and their children [U. S. House of Representatives, Green Book 1996, pp. 897–902]. Unlike the Food Stamp program and especially AFDC, Medicaid eligibility has expanded dramatically since 1984, resulting in a more than threefold increase between 1984 and 1994 in Medicaid expenditures on families with dependent children (and a 60 per- cent increase in the caseload). Prior to 1987, Medicaid eligibility for single mothers and their children generally required receipt of AFDC. In a series of expansions, Medicaid coverage was extended to low-income pregnant women and children (again see Figure I). The differences across states in the extent to which they took advantage of the permitted coverage options generated large differences in who was covered in different years in different states. Moreover, state AFDC income limits interacted with the Medicaid expansions to determine the additional families covered (see Meyer and Rosenbaum [2000b] for more details).
We measure Medicaid benets by rst calculating the num- ber of adults and children in the family that would be covered if a woman works. We then convert these numbers to dollar values using Medicaid expenditures per child and adult averaged over all states and years.16 As can be seen in Table I, there was a fairly steady increase over our sample period in the number of family members covered under Medicaid if a single mother works.
The theoretical effect of Medicaid expansions on the decision to work is positive, since those newly covered are those with earnings that would make them ineligible for AFDC. The Med- icaid expansions also could result in some working women in- creasing their hours, if pre-expansion earnings limits resulted in them reducing their hours of work in order to qualify for Medicaid coverage. Overall, the effect on hours conditional on working is ambiguous, since the expansions also could result in hours de- creases for women who choose to reduce their hours in order to qualify for Medicaid coverage for their children.
16. Note that in our specications, Medicaid coverage for the nonworking is collinear with family size and number of children controls, so 5 is not estimated.