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Health Insurance and the Wage Gap

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  • Helen Levy

Abstract

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.

Suggested Citation

  • Helen Levy, 2006. "Health Insurance and the Wage Gap," NBER Working Papers 11975, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:11975
    Note: HE LS HC
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    References listed on IDEAS

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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 431-465, 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. David Card & Alan B. Krueger, 1992. "School Quality and Black-White Relative Earnings: A Direct Assessment," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 151-200.
    4. Randall K. Filer, 1985. "Male-Female Wage Differences: The Importance of Compensating Differentials," ILR Review, Cornell University, ILR School, vol. 38(3), pages 426-437, April.
    5. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-1059, October.
    6. Neal, Derek A & Johnson, William R, 1996. "The Role of Premarket Factors in Black-White Wage Differences," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 869-895, October.
    7. Farber, Henry S. & Levy, Helen, 2000. "Recent trends in employer-sponsored health insurance coverage: are bad jobs getting worse?," Journal of Health Economics, Elsevier, vol. 19(1), pages 93-119, January.
    8. Wankyo Chung, 2003. "Fringe Benefits and Inequality in the Labor Market," Economic Inquiry, Western Economic Association International, vol. 41(3), pages 517-529, July.
    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. 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.
    11. Brooks Pierce, 2001. "Compensation Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1493-1525.
    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.
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    Citations

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    Cited by:

    1. Gulcin Gumus & Tracy Regan, 2007. "Self-Employment and the Role of Health Insurance," Working Papers 0910, University of Miami, Department of Economics.
    2. Gumus, Gulcin & Regan, Tracy L., 2015. "Self-employment and the role of health insurance in the U.S," Journal of Business Venturing, Elsevier, vol. 30(3), pages 357-374.
    3. Mok, Wallace & Siddique, Zahra, 2011. "Racial and Ethnic Inequality in Employer Provided Fringe Benefits," IZA Discussion Papers 6255, Institute for the Study of Labor (IZA).
    4. Tracy L. Regan & Gulcin Gumus, 2006. "Tax Incentives as a Solution to the Uninsured: Evidence from the Self-Employed," Working Papers 0709, University of Miami, Department of Economics, revised Oct 2007.
    5. Laura Bucila, 2008. "Employment-Based Health Insurance and the Minimum Wage," Working Papers 0812, College of the Holy Cross, Department of Economics.
    6. Joseph A. Ritter, 2013. "Racial and Ethnic Differences in Nonwage Compensation," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(4), pages 829-852, October.
    7. Amuedo-Dorantes, Catalina & Kimmel, Jean, 2008. "New Evidence on the Motherhood Wage Gap," IZA Discussion Papers 3662, Institute for the Study of Labor (IZA).
    8. Brooks Pierce, 2010. "Recent Trends in Compensation Inequality," NBER Chapters,in: Labor in the New Economy, pages 63-98 National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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