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Employer Health Benefit Costs and Demand for Part-Time Labor

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  • Jennifer Feenstra Schultz
  • David Doorn
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    Abstract

    The link between rising employer costs for health insurance benefits and demand for part-time workers is investigated using non-public data from the Medical Expenditure Panel Survey- Insurance Component (MEPS-IC). The MEPS-IC is a nationally representative, annual establishment survey from the Agency for Healthcare Research and Quality (AHRQ). Pooling the establishment level data from the MEPS-IC from 1996-2004 and matching with the Longitudinal Business Database and supplemental economic data from the Bureau of Labor Statistics, a reduced form model of the percent of total FTE employees working part-time is estimated. This is modeled as a function of the employer health insurance contribution, establishment characteristics, and state-level economic indicators. To account for potential endogeneity, health insurance expenditures are estimated using instrumental variables (IVs). The unit of analysis is establishments that offer health insurance to full-time employees but not part time employees. Conditional on establishments offering health insurance to full-time employees, a 1 percent increase in employer health insurance contributions results in a 3.7 percent increase in part-time employees working at establishments in the U.S.

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    File URL: ftp://ftp2.census.gov/ces/wp/2009/CES-WP-09-08.pdf
    File Function: First version, 2009
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    Bibliographic Info

    Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 09-08.

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    Length: 21 pages
    Date of creation: Apr 2009
    Date of revision:
    Handle: RePEc:cen:wpaper:09-08

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    Keywords: employer health insurance costs; labor demand; part-time employment;

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    References

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    1. Katherine Baicker & Amitabh Chandra, 2005. "The Labor Market Effects of Rising Health Insurance Premiums," NBER Working Papers 11160, National Bureau of Economic Research, Inc.
    2. Thomas Buchmueller, 1999. "Fringe benefits and the demand for part-time workers," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 31(5), pages 551-563.
    3. Henry S. Farber & Helen Levy, 1998. "Recent Trends in Employer-Sponsored Health Insurance Coverage: Are Bad Jobs Getting Worse?," NBER Working Papers 6709, National Bureau of Economic Research, Inc.
    4. Rogowski, Jeannette & Karoly, Lynn, 2000. "Health insurance and retirement behavior: evidence from the health and retirement survey," Journal of Health Economics, Elsevier, Elsevier, vol. 19(4), pages 529-539, July.
    5. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 11(6), pages 619-32, Nov.-Dec..
    6. Gruber, J. & Madrian, B.C., 1994. "Health Insurance Availability and the Retirement Decision," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 94-04, Massachusetts Institute of Technology (MIT), Department of Economics.
    7. Mark Montgomery & James Cosgrove, 1993. "The effect of employee benefits on the demand for part-time workers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 47(1), pages 87-98, October.
    8. Stephen A. Woodbury & Douglas R. Bettinger, 1991. "The Decline of Fringe-Benefit Coverage in the 1980s," Book chapters authored by Upjohn Institute researchers, W.E. Upjohn Institute for Employment Research, in: Randall W. Eberts & Erica L. Groshen (ed.), Structural Changes in U.S. Labor Markets: Causes and Consequences, pages 105-138 W.E. Upjohn Institute for Employment Research.
    9. Thomas C. Buchmueller & John DiNardo, 2001. "Union Effects on Health Insurance Provision and Coverage in the United States," NBER Working Papers 8238, National Bureau of Economic Research, Inc.
    10. Feldman, Roger, 1993. "Who pays for mandated health insurance benefits?," Journal of Health Economics, Elsevier, Elsevier, vol. 12(3), pages 341-348, October.
    11. David M. Cutler & Brigitte C. Madrian, 1998. "Labor Market Responses to Rising Health Insurance Costs: Evidence on Hours Worked," RAND Journal of Economics, The RAND Corporation, vol. 29(3), pages 509-530, Autumn.
    12. Gruber, Jonathan, 2000. "Health insurance and the labor market," Handbook of Health Economics, Elsevier, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 12, pages 645-706 Elsevier.
    13. Shore-Sheppard, Lara & Buchmueller, Thomas C. & Jensen, Gail A., 2000. "Medicaid and crowding out of private insurance: a re-examination using firm level data," Journal of Health Economics, Elsevier, Elsevier, vol. 19(1), pages 61-91, January.
    14. Gruber, Jonathan, 1994. "The Incidence of Mandated Maternity Benefits," American Economic Review, American Economic Association, American Economic Association, vol. 84(3), pages 622-41, June.
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