Wedges, Wages, and Productivity under the Affordable Care Act

Casey Mulligan and Trevor Gallen

No 19771, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Our paper documents the large labor market wedges created by taxes, subsidies, and regulations included in the Affordable Care Act. The law changes terms of trade in both goods and factor markets for firms offering health insurance coverage. We use a multi-sector (intra-national) trade model to predict and quantify consequences of the Affordable Care Act for the patterns of output, labor usage, and employee compensation. We find that the law will significantly redistribute from high-wage workers to low-wage workers and to non-workers, reduce total factor productivity about one percent, reduce per-capita labor hours about three percent (especially among low-skill workers), reduce output per capita about two percent, and reduce employment less for sectors that ultimately pay employer penalties.

JEL-codes: H3 I13 J2 J3 (search for similar items in EconPapers)
Date: 2013-12
New Economics Papers: this item is included in nep-hea, nep-lab and nep-lma
Note: EFG LS PE
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Citations: View citations in EconPapers (10)

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