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Health Insurance and the Labor Market with Wage Rigidities: Insights from a Laboratory Experiment

Author

Listed:
  • Katerina Sherstyuka

    (University of Hawaii at Manoa)

  • Dolgorsuren Dorjb

    (University of Hawaii at Manoa)

  • Gerard Russo

    (University of Hawaii at Manoa)

Abstract

Most individuals who have health insurance in the U.S. obtain it through their employer. In some states the government mandates employers to provide insurance to certain types of workers. We use experimental laboratory to study how employer mandates affect labor market efficiency and the level and structure of employment in the presence of wage rigidities such as minimum wage laws. We find that a binding minimum wage reduces labor market efficiency and decreases, and may fully eliminate, voluntary provision of health insurance by firms to low wage workers. Mandating health insurance for all workers guarantees insurance coverage for those employed, but reduces firms’ demand for workers and thus leads to unemployment.

Suggested Citation

  • Katerina Sherstyuka & Dolgorsuren Dorjb & Gerard Russo, 2014. "Health Insurance and the Labor Market with Wage Rigidities: Insights from a Laboratory Experiment," Working Papers 201427, University of Hawaii at Manoa, Department of Economics.
  • Handle: RePEc:hai:wpaper:201427
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    File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_14-27.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Labor market; health insurance; minimum wages;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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