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The Employer Penalty, Voluntary Compliance, and the Size Distribution of Firms: Evidence from a Survey of Small Businesses

In: Tax Policy and the Economy, Volume 34

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  • Casey B. Mulligan

Abstract

A new survey of 745 small businesses shows little change in the size distribution of businesses between 2012 and 2016, except among businesses with 40–74 employees, in a way that is closely related to whether they offer health insurance coverage. Using measures of both size and voluntary regulatory compliance, the paper links these changes to the Affordable Care Act’s employer mandate. Between 28,000 and 50,000 businesses nationwide appear to be reducing their number of full-time-equivalent employees to below 50 because of that mandate. This translates to roughly 250,000 positions eliminated from those businesses.
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Suggested Citation

  • Casey B. Mulligan, 2019. "The Employer Penalty, Voluntary Compliance, and the Size Distribution of Firms: Evidence from a Survey of Small Businesses," NBER Chapters, in: Tax Policy and the Economy, Volume 34, pages 139-171, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14343
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    References listed on IDEAS

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    1. Luis Garicano & Claire Lelarge & John Van Reenen, 2016. "Firm Size Distortions and the Productivity Distribution: Evidence from France," American Economic Review, American Economic Association, vol. 106(11), pages 3439-3479, November.
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    4. Trevor S. Gallen & Casey B. Mulligan, 2018. "Wedges, Labor Market Behavior, and Health Insurance Coverage under the Affordable Care Act," National Tax Journal, National Tax Association;National Tax Journal, vol. 71(1), pages 75-120, March.
    5. Mark Duggan & Gopi Shah Goda & Emilie Jackson, 2019. "The Effects of the Affordable Care Act on Health Insurance Coverage and Labor Market Outcomes," National Tax Journal, National Tax Association;National Tax Journal, vol. 72(2), pages 261-322, June.
    6. William E. Even & David A. Macpherson, 2019. "The Affordable Care Act and the Growth of Involuntary Part-Time Employment," ILR Review, Cornell University, ILR School, vol. 72(4), pages 955-980, August.
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    8. Casey B. Mulligan, 2019. "The Employer Penalty, Voluntary Compliance, and the Size Distribution of Firms: Evidence from a Survey of Small Businesses," NBER Chapters, in: Tax Policy and the Economy, Volume 34, pages 139-171, National Bureau of Economic Research, Inc.
    9. Klarita Gërxhani, 2004. "The Informal Sector in Developed and Less Developed Countries: A Literature Survey," Public Choice, Springer, vol. 120(3_4), pages 267-300, September.
    10. Marcus Dillender & Carolyn J. Heinrich & Susan Houseman, 2022. "Effects of the Affordable Care Act on Part-Time Employment: Early Evidence," Journal of Human Resources, University of Wisconsin Press, vol. 57(4), pages 1394-1423.
    11. Benjamin R. Handel & Jonathan T. Kolstad, 2015. "Health Insurance for "Humans": Information Frictions, Plan Choice, and Consumer Welfare," American Economic Review, American Economic Association, vol. 105(8), pages 2449-2500, August.
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    Cited by:

    1. Aslim, Erkmen Giray, 2022. "Public health insurance and employment transitions," Labour Economics, Elsevier, vol. 75(C).
    2. Casey B. Mulligan, 2019. "The Employer Penalty, Voluntary Compliance, and the Size Distribution of Firms: Evidence from a Survey of Small Businesses," NBER Chapters, in: Tax Policy and the Economy, Volume 34, pages 139-171, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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