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Employment-Based Health Insurance and the Minimum Wage

Author

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  • Laura Bucila

    () (Department of Economics, College of the Holy Cross)

Abstract

This paper provides new estimates of the effects of increased federal and state minimum wages on the employment-based health insurance coverage of low-wage workers. I use March Current Population Surveys collected from IPUMS, for 1988 to 2005. Previous studies have found no significant evidence that increased minimum wages reduce fringe benefit receipt (Beeson Royalty 2000; Simon and Kaestner 2003). In contrast to these studies, I use a difference-in-difference approach and I define treatment groups as being individuals in the lowest 1 and 2 deciles of the hourly wage distribution. Little evidence was found for the federal minimum wage increase of 1990-91, but estimates of the effect of the 1996-97 increase suggest a small negative impact for younger workers and workers in smaller firms. At the state level, I find more suggestive results of a negative impact of the minimum wage increases. New Jersey (1992) and Massachusetts (2000-2001) exhibit negative effects of being in the treatment group on the probability of having employment-based health insurance for most of the specifications, while the results in Oregon (1991) and Connecticut (2000-2001) are more sensitive to the specification. The results suggest that being in the treatment group makes individuals 3 to 4 percentage points less likely to be policyholders of employment-based health insurance compared to the control group.

Suggested Citation

  • Laura Bucila, 2008. "Employment-Based Health Insurance and the Minimum Wage," Working Papers 0812, College of the Holy Cross, Department of Economics.
  • Handle: RePEc:hcx:wpaper:0812
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    File URL: http://web.holycross.edu/RePEc/hcx/HC0812-Bucila_InsuranceMinimumWage.pdf
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    References listed on IDEAS

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    29. repec:fth:prinin:298 is not listed on IDEAS
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    More about this item

    Keywords

    Minimum Wage; Fringe Benefits;

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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