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Worker Sorting, Health Insurance and Wages: Further Evidence from Displaced Workers in the United States

  • Steven F. Lehrer


    (School of Policy Studies and Department of Economics, Queen’s University)

  • Nuno Sousa Pereira


    (CETE, Faculdade de Economia, Universidade do Porto)

The United States has the distinction of being the only industrialized nation without universal health insurance. Health insurance may have impacts on the US labor market. We use data on displaced workers over a 25 year period to document how the role of health insurance on wages and worker sorting has evolved. We find that the provision of health insurance increasingly influences wage inequality. Our results indicate that the portion of the unadjusted wage gap due only to selection bias from unobserved (to the analyst) characteristics, such as ability or innate health status has grown rapidly since 2000. Further, while there have been substantial changes in how displaced workers sort to firms that offer health insurance benefits over the last 25 years, many of the patterns have reversed directions over the past six years. Finally, we discuss the policy implications of our results.

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Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series CEF.UP Working Papers with number 0804.

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Length: 31 pages
Date of creation: Sep 2008
Date of revision:
Handle: RePEc:por:cetedp:0804
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