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Employment-Based Health Insurance and the Minimum Wage

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  • Laura Bucila

    ()
    (Department of Economics, College of the Holy Cross)

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://college.holycross.edu/RePEc/hcx/Bucila_InsuranceMinimumWage.pdf
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Bibliographic 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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Keywords: Minimum Wage; Fringe Benefits;

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  1. David M. Cutler & Jonathan Gruber, 1995. "Does Public Insurance Crowd Out Private Insurance?," NBER Working Papers 5082, National Bureau of Economic Research, Inc.
  2. Janet Currie & Bruce C. Fallick, 1996. "The Minimum Wage and the Employment of Youth Evidence from the NLSY," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 404-428.
  3. 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.
  4. 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.
  5. Helen Levy, 2006. "Health Insurance and the Wage Gap," NBER Working Papers 11975, National Bureau of Economic Research, Inc.
  6. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
  7. David Card & Alan B. Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," NBER Working Papers 4509, National Bureau of Economic Research, Inc.
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  9. 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.
  10. Anne Beeson Royalty, 2000. "Do Minimum Wage Increases Lower the Probability that Low-Skilled Workers Will Receive Fringe Benefits?," JCPR Working Papers 172, Northwestern University/University of Chicago Joint Center for Poverty Research.
  11. Lawrence F. Katz & Alan B. Krueger, 1992. "The Effect of the Minimum Wage on the Fast Food Industry," NBER Working Papers 3997, National Bureau of Economic Research, Inc.
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  14. Brown, Charles, 1988. "Minimum Wage Laws: Are They Overrated?," Journal of Economic Perspectives, American Economic Association, vol. 2(3), pages 133-45, Summer.
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  23. 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.
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  25. 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.
  26. repec:fth:prinin:402 is not listed on IDEAS
  27. 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(2), pages 75-142.
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