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The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers' Compensation Insurance

In: Tax Policy and the Economy, Volume 5

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  • Jonathan Gruber
  • Alan B. Krueger

Abstract

Workers' compensation insurance provides cash payments and medical benefits to workers who incur a work-related injury or illness. Many features of the workers' compensation program parallel features of proposed mandated employer-paid health insurance plans. This paper empirically examines the incidence of the workers' compensation program to infer the likely consequences of mandated health insurance proposals. In certain industries, such as trucking and carpentry, workers' compensation insurance costs are quite large, and vary tremendously within states over time, and across states at a moment in time. This variation is used to identify the incidence of the program. Empirical analysis of two data sets suggest that changes in employers' costs of workers' compensation insurance are largely shifted to employees in the form of lower wages. In addition, higher insurance costs are found to have a negative but statistically insignificant effect on employment. The implied elasticity of labor demand from our results is about -.50.
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Suggested Citation

  • Jonathan Gruber & Alan B. Krueger, 1991. "The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers' Compensation Insurance," NBER Chapters, in: Tax Policy and the Economy, Volume 5, pages 111-144, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:11270
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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