| Summary: | Social programs frequently have two effects on labor supply: an income effect and a wage effect. Programs produce a wage effect by linking benefits or program premiums to income, generating an implicit marginal tax rate on labor. Programs produce an income effect through the actual cash or in-kind transfer they provide. Conditional on wage and unearned income elasticities, labor market responses to program structure reveal the value of program participation to beneficiaries. I study a public policy change in Tennessee that disenrolled 12% of its Medicaid population, and use simple calculations to estimate a cash value to beneficiaries of $0.26 cents per dollar spent. Using this same policy change, I estimate a richer model that allows for heterogeneity in family structure, wages, property income, and preferences over healthcare types. This method yields a value of Medicaid of $0.39 per dollar of spending. When allowing for heterogeneity, I find large variance in the implied distribution of Medicaid's value to beneficiaries, and that most of this variance can be explained by the variance in Medicaid expenditures across recipients. Reinterpreting past literature focused on the labor market effects of Medicaid, I generate a set of estimates of the cash exchange value of Medicaid that are comparable to the range of the values I estimate with Tennessee data and varying modeling assumptions, ranging from $0.20-$0.60 in recipient value per expenditure dollar.
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