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

Conventional labor supply studies assume constant eligibility monitoring of income-tested program participants, but the time between two consecutive eligibility certifications (the "recertification period") can be as long as a year for Medicaid /CHIP recipients. In this paper, I study the optimal recertification period for this population. A long recertification period, while reducing monitoring costs, is predicted to induce program participation via temporary income adjustments. However, I find no support for this prediction using the 2001 and 2004 Survey of Income and Program Participation. Given this, I propose a simple framework to compute the optimal recertification period and find 12 months to be its lower bound.