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Compensating wage differentials and the impact of health insurance in the public sector on wages and hours

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  • Qin, Paige
  • Chernew, Michael

Abstract

This paper examines the trade-off between wages and employer spending on health insurance for public sector workers, and the relationship between coverage and hours worked. Our primary approach compares trends in wages and hours for public employees with and without state/local government provided health insurance using individual-level micro-data from the 1992–2011 CPS. To adjust for differences between insured and uninsured public sector employees, we create a matched sample based on an employee's propensity to receive health insurance. We assess the relationship between state contribution to the health plan premium, state-level healthcare spending, and the wages and hours of state and local government employees. We find modest reductions in wages are associated with having employer-sponsored health insurance (ESHI), although this effect is not precisely measured. The reduction in wages associated with having ESHI is larger among non-unionized workers. Further, we find little evidence that provision of health insurance increases hours worked.

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  • Qin, Paige & Chernew, Michael, 2014. "Compensating wage differentials and the impact of health insurance in the public sector on wages and hours," Journal of Health Economics, Elsevier, vol. 38(C), pages 77-87.
    • Handle: RePEc:eee:jhecon:v:38:y:2014:i:c:p:77-87
    DOI: 10.1016/j.jhealeco.2014.08.001
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    Cited by:

    1. Sameera Awawda & Mohammad Abu-Zaineh, 2019. "An Operationalizing Theoretical Framework for the Analysis of Universal Health Coverage Reforms: First Test on an Archetype Developing Economy," Working Papers halshs-02009858, HAL.
    2. Lutz, Byron & Sheiner, Louise, 2014. "The fiscal stress arising from state and local retiree health obligations," Journal of Health Economics, Elsevier, vol. 38(C), pages 130-146.
    3. Bíró, A.; & Elek, P.;, 2024. "Firm Quality and Health Maintenance," Health, Econometrics and Data Group (HEDG) Working Papers 24/13, HEDG, c/o Department of Economics, University of York.
    4. Nicholas Tilipman, 2022. "Employer Incentives and Distortions in Health Insurance Design: Implications for Welfare and Costs," American Economic Review, American Economic Association, vol. 112(3), pages 998-1037, March.
    5. Dong-Shang Chang & Wen-Sheng Wang & Rouwen Wang, 2018. "Identifying Critical Factors of Sustainable Healthcare Institutions’ Indicators Under Taiwan’s National Health Insurance System," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 140(1), pages 287-307, November.
    6. Duha Altindag & Samuel Cole & R. Alan Seals Jr, 2022. "The Price of COVID-19 Risk in a Public University," Papers 2204.00894, arXiv.org.
    7. Morrill, Melinda Sandler, 2014. "Active and retired public employees’ health insurance: Potential data sources," Journal of Health Economics, Elsevier, vol. 38(C), pages 147-152.
    8. Nga Le Thi Quynh & Groot, Wim & Tomini, Sonila M. & Tomini, Florian, 2017. "Effects of health insurance on labour supply: A systematic review," MERIT Working Papers 2017-017, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    Public; Health insurance; Wage; Tradeoff; Hours worked;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • I1 - Health, Education, and Welfare - - Health
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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