The elusive wage-benefit trade-off: The case of employer-provided health insurance

Jed DeVaro and Nan L. Maxwell

International Journal of Industrial Organization, 2014, vol. 37, issue C, 23-37

Abstract: This study shows that standard regressions estimated to measure a trade-off between wages and health insurance are misspecified by insufficiently accounting for establishment and firm size; an interactive, size-corrected specification is more likely to reveal a trade-off. Furthermore, because insurance decisions are typically made by firms, and wages set by establishments, the insurance constraint on establishments in multi-establishment firms weakens the trade-off. We use model-generated data to show that both factors contribute to the failure in previous research to identify a trade-off, and data from a cross section of Northern Californian establishments to test for a trade-off in multi-establishment and single-establishment firms.

Keywords: Employer-provided health insurance; Wage-benefit trade-off (search for similar items in EconPapers)
JEL-codes: J33 M52 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:37:y:2014:i:c:p:23-37

DOI: 10.1016/j.ijindorg.2014.07.004

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