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Do minimum wage laws affect employer-sponsored insurance provision?

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  • Meiselbach, Mark K.
  • Abraham, Jean M.

Abstract

Employers may respond to minimum wage increases by adjusting their health benefits. We examine the impact of state minimum wage increases on employer health benefit offerings using the 2002–2020 Medical Expenditure Panel Survey – Insurance/Employer Component data. Our primary regression specifications are difference-in-differences models that estimate the relationship between within-state changes in employer-sponsored insurance and minimum wage laws over time. We find that a $1 increase in minimum wages is associated with a 0.92 percentage point (p.p.) decrease in the percentage of employers offering health insurance, largely driven by small employers and employers with a greater share of low-wage employees. A $1 increase is also associated with a 1.83 p.p. increase in the prevalence of plans with a deductible requirement, but we do not find consistent evidence that other benefit characteristics are affected. We find no consequent change in uninsurance, likely explained by an increase in Medicaid enrollment.

Suggested Citation

  • Meiselbach, Mark K. & Abraham, Jean M., 2023. "Do minimum wage laws affect employer-sponsored insurance provision?," Journal of Health Economics, Elsevier, vol. 92(C).
    • Handle: RePEc:eee:jhecon:v:92:y:2023:i:c:s0167629623001029
    DOI: 10.1016/j.jhealeco.2023.102825
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    References listed on IDEAS

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    1. Anne Beeson Royalty, 2000. "Do Minimum Wage Increases Lower the Probability that Low-Skilled Workers Will Receive Fringe Benefits?," JCPR Working Papers 172, Northwestern University/University of Chicago Joint Center for Poverty Research.
    2. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
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    Cited by:

    1. Arindrajit Dube & Attila S. Lindner, 2024. "Minimum Wages in the 21st Century," NBER Working Papers 32878, National Bureau of Economic Research, Inc.
    2. Clemens, Jeffrey, 2024. "Minimum Wage Hikes Bring Tradeoffs beyond Pay and Jobs," MPRA Paper 121748, University Library of Munich, Germany.

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