Eligibility Recertification and Dynamic Opt-in Incentives in Income-tested Social Programs: Evidence from Medicaid/CHIP

Conventional labor supply studies assume the constant eligibility monitoring of income-tested program participants, but this is not true for most programs. For example, states can allow children to enroll in Medicaid/CHIP for 12 months regardless of family income changes. A long recertification period reduces monitoring costs but is predicted to induce program participation by temporary income adjustments. However, I find little evidence of strategic behavior from the Survey of Income and Program Participation. Given the lack of income responses, I propose a framework to compute the optimal recertification period and find 12 months to be its lower bound.