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Employment-Based Health Insurance and the Minimum Wage

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Author Info
Laura Bucila () (Department of Economics, College of the Holy Cross)

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Abstract

This paper provides new estimates of the effects of increased federal and state minimum wages on the employment-based health insurance coverage of low-wage workers. I use March Current Population Surveys collected from IPUMS, for 1988 to 2005. Previous studies have found no significant evidence that increased minimum wages reduce fringe benefit receipt (Beeson Royalty 2000; Simon and Kaestner 2003). In contrast to these studies, I use a difference-in-difference approach and I define treatment groups as being individuals in the lowest 1 and 2 deciles of the hourly wage distribution. Little evidence was found for the federal minimum wage increase of 1990-91, but estimates of the effect of the 1996-97 increase suggest a small negative impact for younger workers and workers in smaller firms. At the state level, I find more suggestive results of a negative impact of the minimum wage increases. New Jersey (1992) and Massachusetts (2000-2001) exhibit negative effects of being in the treatment group on the probability of having employment-based health insurance for most of the specifications, while the results in Oregon (1991) and Connecticut (2000-2001) are more sensitive to the specification. The results suggest that being in the treatment group makes individuals 3 to 4 percentage points less likely to be policyholders of employment-based health insurance compared to the control group.

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File URL: http://www.holycross.edu/departments/economics/RePEc/Bucila_InsuranceMinimumWage.pdf
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Publisher Info
Paper provided by College of the Holy Cross, Department of Economics in its series Working Papers with number 0812.

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Length: 39 pages
Date of creation: Sep 2008
Date of revision:
Handle: RePEc:hcx:wpaper:0812

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Related research
Keywords: Minimum Wage; Fringe Benefits;

Find related papers by JEL classification:
J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Private Pensions
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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References listed on IDEAS
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  1. repec:att:wimass:199512 is not listed on IDEAS
  2. repec:fth:prinin:402 is not listed on IDEAS
  3. Brown, Charles & Gilroy, Curtis & Kohen, Andrew, 1982. "The Effect of the Minimum Wage on Employment and Unemployment," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 487-528, June. [Downloadable!] (restricted)
  4. 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. [Downloadable!] (restricted)
    Other versions:
  5. Kosali Ilayperuma Simon & Robert Kaestner, 2003. "Do Minimum Wages Affect Non-wage Job Attributes? Evidence on Fringe Benefits and Working Conditions," NBER Working Papers 9688, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. David M. Cutler & Jonathan Gruber, 1995. "Does Public Insurance Crowd Out Private Insurance?," NBER Working Papers 5082, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. 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. [Downloadable!] (restricted)
  8. Behrman, Jere R & Sickles, Robin C & Taubman, Paul, 1983. "The Impact of Minimum Wages on the Distributions of Earnings for Major Race-Sex Groups: A Dynamic Analysis," American Economic Review, American Economic Association, vol. 73(4), pages 766-78, September. [Downloadable!] (restricted)
  9. Marjorie Honig & Irena Dushi, 2005. "Household Demand for Health Insurance: Price and Spouse's Coverage," Hunter College Department of Economics Working Papers 411, Hunter College: Department of Economics. [Downloadable!]
  10. Helen Levy, 2006. "Health Insurance and the Wage Gap," NBER Working Papers 11975, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Cutler, David M & Gruber, Jonathan, 1996. "The Effect of Medicaid Expansions on Public Insurance, Private Insurance, and Redistribution," American Economic Review, American Economic Association, vol. 86(2), pages 378-83, May. [Downloadable!] (restricted)
  12. Madrian, Brigitte C, 1994. "Employment-Based Health Insurance and Job Mobility: Is There Evidence of Job-Lock?," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 27-54, February. [Downloadable!] (restricted)
    Other versions:
  13. Henry S. Farber & Helen Levy, 1998. "Recent Trends in Employer-Sponsored Health Insurance Coverage: Are Bad Jobs Getting Worse?," Working Papers 781, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  14. Brown, Charles, 1988. "Minimum Wage Laws: Are They Overrated?," Journal of Economic Perspectives, American Economic Association, vol. 2(3), pages 133-45, Summer. [Downloadable!] (restricted)
  15. Jean Marie Abraham & William B. Vogt & Martin Gaynor, 2002. "Household Demand for Employer-Based Health Insurance," NBER Working Papers 9144, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Betsey, Charles L & Dunson, Bruce H, 1981. "Federal Minimum Wage Laws and the Employment of Minority Youth," American Economic Review, American Economic Association, vol. 71(2), pages 379-84, May. [Downloadable!] (restricted)
  17. Jonathan Gruber & Michael Lettau, 2000. "How Elastic is the Firm's Demand for Health Insurance?," NBER Working Papers 8021, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  19. Chinhui Juhn & Kevin M. Murphy & Robert H. Topel, 1991. "Why Has the Natural Rate of Unemployment Increased over Time?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1991-2), pages 75-142. [Downloadable!]
  20. Anne Beeson Royalty, 2001. "Do Minimum Wage Increases Lower the Probability that Low-Skilled Workers Will Receive Fringe Benefits?," JCPR Working Papers 222, Northwestern University/University of Chicago Joint Center for Poverty Research.
    Other versions:
  21. John Kennan, 1995. "The Elusive Effects of Minimum Wages," Journal of Economic Literature, American Economic Association, vol. 33(4), pages 1950-1965, December. [Downloadable!] (restricted)
  22. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027.
  23. Thomas C. Buchmueller & Robert G. Valletta, 1996. "The effect of health insurance on married female labor supply," Working Papers in Applied Economic Theory 96-09, Federal Reserve Bank of San Francisco.
  24. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-93, September. [Downloadable!] (restricted)
    Other versions:
  25. Jayanta Bhattacharya & William B. Vogt, 2006. "Employment and Adverse Selection in Health Insurance," NBER Working Papers 12430, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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