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The Determinants of Rising Inequality in Health Insurance and Wages: An Equilibrium Model of Workers' Compensation and Health Care Policies

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  • Rong Hai

    () (Department of Economics, University of Pennsylvania)

Abstract

I develop and structurally estimate a non-stationary overlapping generations equilibrium model of employment and workers' health insurance and wage compensation, to investigate the determinants of rising inequality in health insurance and wages in the U.S. over the last 30 years. I find that skill-biased technological change and the rising cost of medical care services are the two most important determinants, while the impact of Medicaid eligibility expansion is quantitatively small. I conduct counterfactual policy experiments to analyze key features of the 2010 Patient Protection and Affordable Care Act, including employer mandates and further Medicaid eligibility expansion. I find that (i) an employer mandate reduces both wage and health insurance coverage inequality, but also lowers the employment rate of less educated individuals; and (ii) further Medicaid eligibility expansion increases employment rate of less educated individuals, reduces health insurance coverage disparity, but also causes larger wage inequality.

Suggested Citation

  • Rong Hai, 2013. "The Determinants of Rising Inequality in Health Insurance and Wages: An Equilibrium Model of Workers' Compensation and Health Care Policies," PIER Working Paper Archive 13-019, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  • Handle: RePEc:pen:papers:13-019
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    References listed on IDEAS

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    More about this item

    Keywords

    Labor Market; Health Insurance; Health Care Policies; Inequality;

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • I1 - Health, Education, and Welfare - - Health
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

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