Labor Market Implications of Rising Costs of Employer-Provided Health Insurance
Variation in income tax policies and health insurance costs are shown to be theoretically appropriate instruments to identify endogenous firm wage and benefit offers in a labor supply model. Empirical results show that firms are more likely to provide health insurance benefits in states with high marginal income tax rates and low hospitalization costs. The model implies that over the 1983-1995 period, large increases in health insurance costs and reductions in marginal income tax rates lowered the probability of receiving health insurance benefits from employers by 10 percentage points. This decrease in benefits lowered hours of labor supply by 4-7%.
|Date of creation:||02 Apr 2002|
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- David M. Cutler & Brigitte C. Madrian, 1998.
"Labor Market Responses to Rising Health Insurance Costs: Evidence on Hours Worked,"
RAND Journal of Economics,
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JCPR Working Papers
27, Northwestern University/University of Chicago Joint Center for Poverty Research.
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in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695
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NBER Working Papers
7291, National Bureau of Economic Research, Inc.
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