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Worker Sorting, Taxes and Health Insurance Coverage

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  • Kevin Lang

    (Boston University and NBER and IZA)

Abstract

If firms hire heterogeneous workers but must offer all workers insurance bene?fits under similar terms, then in equilibrium, some firms offer free health insurance, some require an employee premium payment and some do not offer insurance. Making the employee contribution pre-tax lowers the cost to workers of a given employee premium and encourages more firms to charge. This increases the offer rate, lowers the take-up rate, increases (decreases) coverage among high (low) demand groups, with an indeterminate overall effect. This pattern is consistent with trends in the U.S. economy following the creation of section 125 plans.

Suggested Citation

  • Kevin Lang, 2010. "Worker Sorting, Taxes and Health Insurance Coverage," Boston University - Department of Economics - Working Papers Series WP2010-015, Boston University - Department of Economics.
    • Handle: RePEc:bos:wpaper:wp2010-015
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    References listed on IDEAS

    as
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    Cited by:

    1. Sayeh S. Nikpay, 2020. "Entrepreneurship And Job Lock: The Interaction Between Tax Subsidies And Health Insurance Regulations," Contemporary Economic Policy, Western Economic Association International, vol. 38(1), pages 30-47, January.

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    More about this item

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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