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Health Insurance and the Wage Gap

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  • Helen Levy

Abstract

Estimates of labor market inequality usually focus only on wages, even though fringes account for almost one-third of total compensation. Using data from the Current Population Survey, I analyze coverage by own-employer health insurance coverage among full-time workers for women versus men, blacks versus whites and Hispanics versus whites. I find significant gaps in coverage for each of these groups. About two-thirds of the gap for blacks or Hispanics is explained by differences in observable characteristics (primarily education and occupation). The gap for women is not explained by controlling for observables. Looking over the 20 year period from 1980 to 2000, I find that the adjusted gap in own-employer coverage for women has been relatively flat over this period and is consistently much smaller than the male/female wage gap (about half as large), so that measuring inequality in wages plus health insurance would result in a smaller estimate of male/female compensation inequality than measuring wages alone. The same is generally true for blacks although their health insurance gap is much closer in magnitude to their wage gap. For Hispanics, the health insurance gap is nearly identical to the wage gap and both are increasing over time.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11975.

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Date of creation: Jan 2006
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Handle: RePEc:nbr:nberwo:11975

Note: HE LS HC
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  1. Charles Brown & Mary Corcoran, 1996. "Sex-Based Differences in School Content and the Male/Female Wage Gap," NBER Working Papers 5580, National Bureau of Economic Research, Inc.
  2. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc.
  3. Eric Solberg & Teresa Laughlin, 1995. "The gender pay gap, fringe benefits, and occupational crowding," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 48(4), pages 692-708, July.
  4. 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.
  5. Derek A. Neal & William R. Johnson, 1995. "The Role of Pre-Market Factors in Black-White Wage Differences," NBER Working Papers 5124, National Bureau of Economic Research, Inc.
  6. Irena Dushi & Marjorie Honig, 2005. "Offers or Take-up: Explaining Minorities’ Lower Health Insurance Coverage," Economics Working Paper Archive at Hunter College, Hunter College Department of Economics 412, Hunter College Department of Economics.
  7. Brooks Pierce, 2001. "Compensation Inequality," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(4), pages 1493-1525, November.
  8. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
  9. David Card & Alan B. Krueger, 1991. "School Quality and Black-White Relative Earnings: A Direct Assessment," NBER Working Papers 3713, National Bureau of Economic Research, Inc.
  10. Wankyo Chung, 2003. "Fringe Benefits and Inequality in the Labor Market," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 41(3), pages 517-529, July.
  11. Randall K. Filer, 1985. "Male-female wage differences: The importance of compensating differentials," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 38(3), pages 426-437, April.
  12. Paul L. Schumann & Dennis A. Ahlburg & Christine Brown Mahoney, 1994. "The Effects of Human Capital and Job Characteristics on Pay," Journal of Human Resources, University of Wisconsin Press, vol. 29(2), pages 481-503.
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Cited by:
  1. Mok, Wallace & Siddique, Zahra, 2011. "Racial and Ethnic Inequality in Employer Provided Fringe Benefits," IZA Discussion Papers 6255, Institute for the Study of Labor (IZA).
  2. Amuedo-Dorantes, Catalina & Kimmel, Jean, 2008. "New Evidence on the Motherhood Wage Gap," IZA Discussion Papers 3662, Institute for the Study of Labor (IZA).
  3. Gulcin Gumus & Tracy Regan, 2007. "Self-Employment and the Role of Health Insurance," Working Papers, University of Miami, Department of Economics 0910, University of Miami, Department of Economics.
  4. Gulcin Gumus & Tracy Regan, 2006. "Tax Incentives as a Solution to the Uninsured: Evidence from the Self-Employed," Working Papers, University of Miami, Department of Economics 0911, University of Miami, Department of Economics, revised Oct 2008.
  5. Brooks Pierce, 2010. "Recent Trends in Compensation Inequality," NBER Chapters, in: Labor in the New Economy, pages 63-98 National Bureau of Economic Research, Inc.
  6. Laura Bucila, 2008. "Employment-Based Health Insurance and the Minimum Wage," Working Papers, College of the Holy Cross, Department of Economics 0812, College of the Holy Cross, Department of Economics.

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