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The Effect of Mandatory Employer-Sponsored Insurance (ESI) on Health Insurance Coverage and Labor Force Utilization in Hawaii: Evidence from the Current Population Survey (CPS) 1994-2004

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Author Info

  • Sang-Hyop Lee

    ()
    (Department of Economics, University of Hawaii at Manoa)

  • Gerard Russo

    (Department of Economics, University of Hawaii at Manoa)

  • Lawrence H. Nitz

    (Department of Political Science, University of Hawaii at Manoa)

  • Abdul Jabbar

    (Department of Economics, University of Hawaii at Manoa)

Abstract

Using data from the Current Population Surveys, we examine the impact of Hawaii’s mandatory employer-sponsored insurance on health insurance coverage and employment structure in Hawaii. We find empirical evidence of three phenomena. First, private employer-sponsored insurance coverage for full-time workers (more than 20 hours per week) is more prevalent in Hawaii, other things held constant, than in other states and the U.S. as a whole. Second, there is avoidance of the employer-mandate in Hawaii by skirting the 20 hour rule, which changes the both the distribution of employment and the distribution of employment-based insurance coverage by hours worked. Third, Hawaii workers who match with part-time jobs without employer-sponsored health insurance obtain publicly provided health insurance or military coverage with higher probability than their counterparts elsewhere in the U.S. These results suggest that employer mandates induce both higher rates of coverage and labor market sorting.

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File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_05-12.pdf
File Function: First version, 2005
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Bibliographic Info

Paper provided by University of Hawaii at Manoa, Department of Economics in its series Working Papers with number 200512.

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Length: 41 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:hai:wpaper:200512

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Keywords: health insurance; employee sponsored insurance; Hawaii's labor market;

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References

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  1. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  2. John C. Ham & Lara D. Shore-Sheppard, 2005. "Did expanding Medicaid affect welfare participation?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 58(3), pages 452-470, April.
  3. Thomas Buchmueller, 1999. "Fringe benefits and the demand for part-time workers," Applied Economics, Taylor & Francis Journals, vol. 31(5), pages 551-563.
  4. A. S. Yelowitz, . "The Medicaid notch, labor supply, and welfare participation: Evidence from eligibility expansions," Institute for Research on Poverty Discussion Papers 1084-96, University of Wisconsin Institute for Research on Poverty.
  5. David M. Cutler & Brigitte C. Madrian, 1996. "Labor Market Responses to Rising Health Insurance Costs: Evidence on Hours Worked," NBER Working Papers 5525, National Bureau of Economic Research, Inc.
  6. Feldstein, Martin & Friedman, Bernard, 1977. "Tax subsidies, the rational demand for insurance and the health care crisis," Journal of Public Economics, Elsevier, vol. 7(2), pages 155-178, April.
  7. Frank A. Scott & Mark C. Berger & Dan A. Black, 1989. "Effects of the tax treatment of fringe benefits on labor market segmentation," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 42(2), pages 216-229, January.
  8. Pauly, Mark V, 1986. "Taxation, Health Insurance, and Market Failure in the Medical Economy," Journal of Economic Literature, American Economic Association, vol. 24(2), pages 629-75, June.
  9. 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.
  10. Gruber, Jonathan & Poterba, James, 1994. "Tax Incentives and the Decision to Purchase Health Insurance: Evidence from the Self-Employed," The Quarterly Journal of Economics, MIT Press, vol. 109(3), pages 701-33, August.
  11. 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.
  12. Jonathan Gruber, 2002. "Taxes and Health Insurance," NBER Chapters, in: Tax Policy and the Economy, Volume 16, pages 37-66 National Bureau of Economic Research, Inc.
  13. Norman K. Thurston, 1997. "Labor market effects of Hawaii's mandatory employer-provided health insurance," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 51(1), pages 117-135, October.
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Cited by:
  1. Thomas C. Buchmueller & John DiNardo & Robert G. Valletta, 2011. "The Effect of an Employer Health Insurance Mandate on Health Insurance Coverage and the Demand for Labor: Evidence from Hawaii," American Economic Journal: Economic Policy, American Economic Association, vol. 3(4), pages 25-51, November.

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