We investigate the effects of employer-provided health insurance on the labor supply of married women. Because health benefits commonly are restricted to full-time workers, wives who prefer to work short hours hut have no alternate source of insurance may work long hours in order to acquire coverage for their families. We use dates from the April 1993 Current Population Survey Benefits Supplement, and we exploit variation in coverage under husbands’ health plans to estimate the magnitude of this effect. Our reduced-form labor supply models indicate a strong negative effect of husbands’ health insurance on wives’ work hours, particularly in families with children. This effect persists when we replace husbands’ insurance coverage with husbands’ offered insurance, and when we use a multinomial logit model that accounts for unobserved heterogeneity in family labor supply preferences.

Thomas C. Buchmueller is an assistant professor at the Graduate School of Management, University of California at Irvine. Robert C. Valletta is a Senior Economist at the Federal Reserve Bank of San Francisco. The authors thank Brigitte Madrian, Barbara Schone, Eric Solberg, and two anonymous referees for helpful comments and suggestions. The opinions expressed in this paper do not necessarily represent the views of the Federal Reserve Bank of San Francisco or the Federal Reserve System. The data used in this article can be obtained from Thomas C. Buchmueller, Graduate School of Management, University of California, Irvine, CA 92697. (tcbuchmu@uci.edu) from May 1999 through April 2002.