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Health Insurance and the Wage Gap

  • Helen Levy

Estimates of labor market inequality usually focus only on wages, even though fringes account for almost one-third of total compensation. Using data from the Current Population Survey, I analyze coverage by own-employer health insurance coverage among full-time workers for women versus men, blacks versus whites and Hispanics versus whites. I find significant gaps in coverage for each of these groups. About two-thirds of the gap for blacks or Hispanics is explained by differences in observable characteristics (primarily education and occupation). The gap for women is not explained by controlling for observables. Looking over the 20 year period from 1980 to 2000, I find that the adjusted gap in own-employer coverage for women has been relatively flat over this period and is consistently much smaller than the male/female wage gap (about half as large), so that measuring inequality in wages plus health insurance would result in a smaller estimate of male/female compensation inequality than measuring wages alone. The same is generally true for blacks although their health insurance gap is much closer in magnitude to their wage gap. For Hispanics, the health insurance gap is nearly identical to the wage gap and both are increasing over time.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11975.

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Date of creation: Jan 2006
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Handle: RePEc:nbr:nberwo:11975
Note: HE LS HC
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  1. Brown, Charles & Corcoran, Mary, 1997. "Sex-Based Differences in School Content and the Male-Female Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 431-65, July.
  2. Eric Solberg & Teresa Laughlin, 1995. "The Gender Pay Gap, Fringe Benefits, and Occupational Crowding," ILR Review, Cornell University, ILR School, vol. 48(4), pages 692-708, July.
  3. Henry S. Farber & Helen Levy, 1998. "Recent Trends in Employer-Sponsored Health Insurance Coverage: Are Bad Jobs Getting Worse?," NBER Working Papers 6709, National Bureau of Economic Research, Inc.
  4. Wankyo Chung, 2003. "Fringe Benefits and Inequality in the Labor Market," Economic Inquiry, Western Economic Association International, vol. 41(3), pages 517-529, July.
  5. Paul L. Schumann & Dennis A. Ahlburg & Christine Brown Mahoney, 1994. "The Effects of Human Capital and Job Characteristics on Pay," Journal of Human Resources, University of Wisconsin Press, vol. 29(2), pages 481-503.
  6. David Card & Alan Krueger, 1990. "School Quality and Black/White Relative Earnings: A Direct Assessment," Working Papers 652, Princeton University, Department of Economics, Industrial Relations Section..
  7. Derek A. Neal & William R. Johnson, 1995. "The Role of Pre-Market Factors in Black-White Wage Differences," NBER Working Papers 5124, National Bureau of Economic Research, Inc.
  8. Randall K. Filer, 1985. "Male-female wage differences: The importance of compensating differentials," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 38(3), pages 426-437, April.
  9. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
  10. Eric Solberg & Teresa Laughlin, 1995. "The gender pay gap, fringe benefits, and occupational crowding," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 48(4), pages 692-708, July.
  11. Brooks Pierce, 2001. "Compensation Inequality," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1493-1525, November.
  12. Irena Dushi & Marjorie Honig, 2005. "Offers or Take-up: Explaining Minorities’ Lower Health Insurance Coverage," Economics Working Paper Archive at Hunter College 412, Hunter College Department of Economics.
  13. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc.
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