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

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  • Jonathan Gruber

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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4157.

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Date of creation: Sep 1992
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Publication status: published as American Economic Review, June 1994.
Handle: RePEc:nbr:nberwo:4157

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  1. Jonathan Gruber & Alan B. Krueger, 1990. "The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers' Compensation Insurance," NBER Working Papers 3557, National Bureau of Economic Research, Inc.
  2. 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.
  3. Olivia S. Mitchell, 1990. "The Effects of Mandating Benefits Packages," NBER Working Papers 3260, National Bureau of Economic Research, Inc.
  4. 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.
  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. 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.
  7. 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.
  8. Gruber, J., 1992. "State Mandated Benefits and Employer Provided Health Insurance," Working papers 92-18, Massachusetts Institute of Technology (MIT), Department of Economics.
  9. Richard B. Freeman, 1979. "The Effect of Demographic Factors on Age-Earnings Profiles," NBER Working Papers 0316, National Bureau of Economic Research, Inc.
  10. Summers, Lawrence H, 1989. "Some Simple Economics of Mandated Benefits," American Economic Review, American Economic Association, vol. 79(2), pages 177-83, May.
  11. repec:fth:harver:1520 is not listed on IDEAS
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Cited by:
  1. Gruber, Jonathan & Poterba, James, 1994. "Tax Incentives and the Decision to Purchase Health Insurance: Evidence from the Self-Employed," The Quarterly Journal of Economics, MIT Press, vol. 109(3), pages 701-33, August.
  2. 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.
  3. 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.
  4. Jonathan Gruber, 1992. "State Mandated Benefits and Employer Provided Health Insurance," NBER Working Papers 4239, National Bureau of Economic Research, Inc.
  5. 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.
  6. 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.
  7. Caroline Hoxby & M. Daniele Paserman, 1998. "Overidentification Tests with Grouped Data," NBER Technical Working Papers 0223, National Bureau of Economic Research, Inc.
  8. 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.
  9. 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.

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