The Labor Market Effects of Rising Health Insurance Premiums

Katherine Baicker and Amitabh Chandra

No 11160, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Since 2000, premiums for employer-provided health insurance have increased by 59 percent with little corresponding increase in the generosity of coverage. The effect of this increase in costs on wages and employment will depend on workers' valuation of the benefit, the elasticities of labor supply and demand, and institutional constraints on employers' ability to lower wages. Measuring these effects is difficult, however, without a source of exogenous variation in the cost of benefits. We use variation in medical malpractice payments driven by the recent "medical malpractice crisis" to identify the causal effect of rising health insurance premiums on wages, employment, and health insurance coverage. We estimate that a 10 percent increase in health insurance premiums reduces the aggregate probability of being employed by 1.6 percent and hours worked by 1 percent, and increases the likelihood that a worker is employed only part-time by 1.9 percent. For workers covered by employer provided health insurance, this increase in premiums results in an offsetting decrease in wages of 2.3 percent. Thus, rising health insurance premiums may both increase the ranks of the unemployed and place an increasing burden on workers through decreased wages for workers with employer health insurance and decreased hours for workers moved from full time jobs with benefits to part time jobs without.

JEL-codes: I1 J0 J3 (search for similar items in EconPapers)
Date: 2005-02
New Economics Papers: this item is included in nep-hea, nep-his, nep-ias and nep-lab
Note: EH LS PE AG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published as Baicker, Katherine and Amitabh Chandra. "The Labor Market Effects Of Rising Health Insurance Premiums," Journal of Labor Economics, 2006, v24(3,Jul), 609-634.

Downloads: (external link)
http://www.nber.org/papers/w11160.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:11160

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w11160

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().