Labor Market Responses to Rising Health Insurance Costs
AbstractIncreases in the cost of providing health insurance must have some effect on labor markets, either in lower wages, changes in the composition of employment, or both. Despite a presumption that most of this effect will be in the form of lower wages, we document in this paper a significant effect on work hours as well. Using data from the CPS and the SIPP, we show that rising health insurance costs over the 1980s increased the hours worked of those with health insurance by up to 3 percent. We argue that this occurs because health insurance is a fixed cost, and as it becomes more expensive to provide, firms face an incentive to substitute hours per worker for the number of workers employed.
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Bibliographic InfoPaper provided by Harvard University Department of Economics in its series Scholarly Articles with number 2643643.
Date of creation: 1998
Date of revision:
Publication status: Published in Rand Journal of Economics
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