Our primary data set is the public-use CPS, enhanced with cell-means from Larrimore et
al. (2008) to overcome topcoding of high incomes.3 The CPS questionnaire directly captures all cash income, including transfer income, excluding capital gains (see Weinberg, 2006 for a full
list of income sources included in the CPS primary income measure). The CPS also provides
values or imputations for certain government in-kind benefits, including food stamps, housing
subsidies, and school lunches. We include these values in our computation.
While the CPS does not capture the premiums paid for health insurance coverage, it does
ask respondents whether they are insured and, if so, their source of coverage. The Census Bureau
then imputes an ex-ante insurance value of health insurance for all covered persons based on
their employer’s or the government’s cost of purchasing it. When doing so, however, the Census
Bureau treats employer- and government-provided insurance differently. They impute the value
of employer-provided insurance coverage to individuals at its full ex-ante cost. The Census
Bureau determines the value of employer contributions by first asking individuals if they were
covered by employer provided health insurance, and if their employer paid for all, part, or none
of the cost of the plan. Then, individuals in the March CPS are statistically matched to those in
the National Medical Care Expenditure Survey or Medical Expenditure Panel Survey, depending
on survey year, based on a number of explanatory variables common to both.4 This statistical
matching provides an imputation of the employer’s contribution. We use this Census Bureau exante
value of in-kind, employer-provided health insurance to the individual in our analysis.
In contrast to its treatment of employer-provided insurance, the Census Bureau imputes a
fungible insurance value of Medicare and Medicaid to covered individuals, which is intended to
represent the level of resources individuals would have spent on health insurance had it not been
provided to them. The ex-ante value for Medicare and Medicaid is calculated as the respective