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The Efficiency of a Group-Specific Mandated Benefit: Evidence from Health Insurance Benefits for Maternity

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Author Info

  • Gruber, J.

Abstract

I consider the effects of "group-specific mandated benefits", such as mandated maternity leave, which raise the costs of employing a demographically identifiable group. The efficiency of these policies, relative to more broad-based financing of benefits expansions, will largely be a function of the valuation of the mandated benefit by the targeted group. Such valuation should be reflected in substantial shifting of the cost of the mandate to groupspecific wages; however, there may be barriers to the adjustment of relative wages which impede such shifting. I study several 1976 state mandates which stipulated that childbirth be covered comprehensively in health insurance plans, increasing the cost of insuring women of child-bearing age by as much as 5 % of their wages. I find substantial shifting of the costs of these mandates to the wages of the targeted group. Correspondingly, I find little effect on total labor input for the group which benefitted from these mandates; hours rise and employment falls, as may be expected from an increase in the fixed costs of employment. These results are confirmed by using a 1978 Federal mandate as a "reverse experiment".

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Bibliographic Info

Paper provided by Massachusetts Institute of Technology (MIT), Department of Economics in its series Working papers with number 92-19.

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Length: 50 pages
Date of creation: 1992
Date of revision:
Handle: RePEc:mit:worpap:92-19

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Postal: MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT), DEPARTMENT OF ECONOMICS, 50 MEMORIAL DRIVE CAMBRIDGE MASSACHUSETTS 02142 USA
Phone: (617) 253-3361
Fax: (617) 253-1330
Web page: http://econ-www.mit.edu/
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Postal: MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT), DEPARTMENT OF ECONOMICS, 50 MEMORIAL DRIVE CAMBRIDGE MASSACHUSETTS 02142 USA
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Keywords: health economics ; employment ; insurance;

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References

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  1. Richard B. Freeman, 1979. "The Effect of Demographic Factors on Age-Earnings Profiles," Journal of Human Resources, University of Wisconsin Press, vol. 14(3), pages 289-318.
  2. Feldstein, Martin S, 1973. "The Welfare Loss of Excess Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 251-80, Part I, M.
  3. Jonathan Gruber & Alan Krueger, 1990. "The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers' Compensations Insurance," Working Papers 659, Princeton University, Department of Economics, Industrial Relations Section..
  4. repec:fth:harver:1520 is not listed on IDEAS
  5. Joshua D. Angrist, 1990. "The Effect of Veterans Benefits on Veterans' Education and Earnings," NBER Working Papers 3492, National Bureau of Economic Research, Inc.
  6. Arleen Leibowitz, 1983. "Fringe Benefits in Employee Compensation," NBER Chapters, in: The Measurement of Labor Cost, pages 371-394 National Bureau of Economic Research, Inc.
  7. Gruber, J., 1992. "State Mandated Benefits and Employer Provided Health Insurance," Working papers 92-18, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Fullerton, Don, 1991. "Reconciling Recent Estimates of the Marginal Welfare Cost of Taxation," American Economic Review, American Economic Association, vol. 81(1), pages 302-08, March.
  9. Summers, Lawrence H, 1989. "Some Simple Economics of Mandated Benefits," American Economic Review, American Economic Association, vol. 79(2), pages 177-83, May.
  10. Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
  11. Olivia S. Mitchell, 1990. "The Effects of Mandating Benefits Packages," NBER Working Papers 3260, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Baum, Charles II, 2003. "The effect of state maternity leave legislation and the 1993 Family and Medical Leave Act on employment and wages," Labour Economics, Elsevier, vol. 10(5), pages 573-596, October.
  2. Gruber, J. & Poterba, J., 1994. "Tax Incentives and the Decision to Purchase Health Insurance: Evidence from the Self-Employed," Working papers 94-10, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Charles L. Baum, 2006. "The Effects Of Government-Mandated Family Leave On Employer Family Leave Policies," Contemporary Economic Policy, Western Economic Association International, vol. 24(3), pages 432-445, 07.
  4. Caroline Hoxby & M. Daniele Paserman, 1998. "Overidentification Tests with Grouped Data," NBER Technical Working Papers 0223, National Bureau of Economic Research, Inc.
  5. Gruber, J., 1992. "State Mandated Benefits and Employer Provided Health Insurance," Working papers 92-18, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Richard V. Burkhauser & Joseph F. Quinn, 1997. "Implementing Pro-Work Policies for Older Americans in the Twenty-First Century," Boston College Working Papers in Economics 378, Boston College Department of Economics.
  7. Jonathan Gruber & Maria Owings, 1996. "Physician Financial Incentives and Cesarean Section Delivery," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 99-123, Spring.
  8. Arístides Torche & Gert Wagner, 1997. "Previsión Social: Valoración Individual de un Beneficio Mandatado," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 34(103), pages 363-390.
  9. Jonathan Gruber & Brigitte C. Madrian, 1996. "Health Insurance and Early Retirement: Evidence from the Availability of Continuation Coverage," NBER Chapters, in: Advances in the Economics of Aging, pages 115-146 National Bureau of Economic Research, Inc.

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