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Labor Market Implications of Rising Costs of Employer-Provided Health Insurance

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  • Meyer, Rebecca
  • Orazem, Peter
  • Wachenheim, William A.

Abstract

Variation in income tax policies and health insurance costs are shown to be theoretically appropriate instruments to identify endogenous firm wage and benefit offers in a labor supply model. Empirical results show that firms are more likely to provide health insurance benefits in states with high marginal income tax rates and low hospitalization costs. The model implies that over the 1983-1995 period, large increases in health insurance costs and reductions in marginal income tax rates lowered the probability of receiving health insurance benefits from employers by 10 percentage points. This decrease in benefits lowered hours of labor supply by 4-7%.

Suggested Citation

  • Meyer, Rebecca & Orazem, Peter & Wachenheim, William A., 2002. "Labor Market Implications of Rising Costs of Employer-Provided Health Insurance," Staff General Research Papers Archive 10016, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:10016
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    References listed on IDEAS

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    1. Mark C. Berger & Dan A. Black & Frank A. Scott, 1998. "How Well Do We Measure Employer‐Provided Health Insurance Coverage?," Contemporary Economic Policy, Western Economic Association International, vol. 16(3), pages 356-367, July.
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    3. Currie, Janet & Madrian, Brigitte C., 1999. "Health, health insurance and the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 50, pages 3309-3416, Elsevier.
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    6. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
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    Cited by:

    1. Nganje, William E. & Hearne, Robert R. & Orth, Michael & Gustafson, Cole R., 2004. "Using Choice Experiments To Elicit Farmers Preferences? For Crop And Health Insurance," 2004 Annual meeting, August 1-4, Denver, CO 20357, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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    JEL classification:

    • I00 - Health, Education, and Welfare - - General - - - General

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