Working Paper: NBER ID: w19365
Authors: Casey B. Mulligan
Abstract: The Affordable Care Act includes four significant, permanent, implicit unemployment assistance programs, plus various implicit subsidies for underemployment, and expanded Medicaid eligibility for adults. Every sector of the economy, and about half of nonelderly adults, is directly affected by at least one of those provisions. This paper calculates the ACA's impact on the average reward to working among nonelderly household heads and spouses. The law increases marginal tax rates by an average of five percentage points (of employee compensation), on top of the marginal tax rates that were already present before it went into effect. The ACA's addition to labor tax wedges is roughly equivalent to doubling both employer and employee payroll tax rates for half of the population.
Keywords: No keywords provided
JEL Codes: E24; H31; I18; I38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ACA provisions (G52) | marginal tax rates (H29) |
| ACA provisions (G52) | national average marginal labor income tax rate (H31) |
| combined provisions of the ACA (G52) | marginal tax rates in 2015 (H29) |
| implicit tax provisions of the ACA (H26) | marginal tax rates (H29) |
| ACA (G52) | implicit taxation of unemployment benefits (J65) |
| ACA provisions (G52) | notches and cliffs in household budgets (D14) |