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Does Public Health Insurance Reduce Labor Market Flexibility or Encourage the Underground Economy? Evidence from Spain and the United States

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Author Info
Sara De La Rica
Thomas Lemieux

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Abstract

This paper compares the labor market implications of the health insurance system in Spain and in the United States. While most health insurance is privately provided to workers (by employers) in the United States, Spanish workers obtain health insurance coverage from the public social security system. The Spanish system is financed by a payroll (social security) tax shared between employers and employees. There is clear evidence, however, of widespread non-compliance with the social security tax. This paper empirically compares the incidence of health insurance coverage among U.S. workers to the pattern of compliance with the social security tax among Spanish workers. The main finding of this paper is that these two patterns are very similar. They both depend on the same supply and demand factors, which is consistent with basic economic models of private provision of benefits and of tax compliance. However, one important difference between the two systems is that in Spain, unlike the United States, essentially all heads of household work in the covered sector and thus have a full access to public health care for themselves and for their dependents.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4402.

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Date of creation: Jul 1993
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Publication status: published relationship to a non-chapter. This should not happen. Please contact NBER.
Handle: RePEc:nbr:nberwo:4402

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Find related papers by JEL classification:
I1 - Health, Education, and Welfare - - Health
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Patricia M. Danzon, 1990. "Mandated Employment-Based Health Insurance:Incidence and Efficiency Effects," University of Chicago - George G. Stigler Center for Study of Economy and State 60, Chicago - Center for Study of Economy and State.
  2. Bernard Fortin & Thomas Lemieux & Pierre Frechette, 1990. "An Empirical Model of Labor Supply in the Underground Economy," NBER Working Papers 3392, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Summers, Lawrence H, 1989. "Some Simple Economics of Mandated Benefits," American Economic Review, American Economic Association, vol. 79(2), pages 177-83, May. [Downloadable!] (restricted)
  4. repec:fth:prinin:279 is not listed on IDEAS
  5. Diamond, Peter, 1992. "Organizing the Health Insurance Market," Econometrica, Econometric Society, vol. 60(6), pages 1233-54, November. [Downloadable!] (restricted)
  6. 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. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Catalina Amuedo-Dorantes & Sara de la Rica, 2005. "Immigrants Responsiveness to Labor Market Conditions," DFAEII Working Papers 200503, University of the Basque Country - Department of Foundations of Economic Analysis II. [Downloadable!]
  2. Paula Auerbach & María Eugenia Genoni & Carmen Pagés-Serra, 2005. "Cobertura del sistema de seguridad social y el mercado laboral en países en desarrollo," RES Working Papers 4422, Inter-American Development Bank, Research Department. [Downloadable!]
  3. Card, David & de la Rica, Sara, 2004. "The Effect of Firm-Level Contracts on the Structure of Wages: Evidence from Matched Employer-Employee Data," IZA Discussion Papers 1421, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Mary C. King, 2002. "Strong Families or Patriarchal Economies? Southern European Labor Markets and Welfare in Comparative Perspective," EUI-RSCAS Working Papers 14, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS). [Downloadable!]
  5. Catalina Amuedo-Dorantes & Sara de la Rica, 2005. "Immigrants’ Responsiveness to Labor Market Conditions and Its Implications on Regional Disparities: Evidence from Spain," IZA Discussion Papers 1557, Institute for the Study of Labor (IZA). [Downloadable!]
  6. David Card & Sara de la Rica, 2004. "The effect of firm-level contracts on the structure of wages: evidence from matched .," DFAEII Working Papers 200406, University of the Basque Country - Department of Foundations of Economic Analysis II, revised 15 Nov 2006. [Downloadable!]
  7. Alan Krueger, 1994. "Observations on Employment-Based Government Mandates, With Particular Reference to Health Insurance," Working Papers 702, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  8. Paula Auerbach & María Eugenia Genoni & Carmen Pagés-Serra, 2005. "Social Security Coverage and the Labor Market in Developing Countries," RES Working Papers 4421, Inter-American Development Bank, Research Department. [Downloadable!]
    Other versions:
  9. Brigitte Madrian, 2006. "The U.S. Health Care System and Labor Markets," NBER Working Papers 11980, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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