Worker Sorting and Health Insurance Coverage: Evidence from Displaced Workers

Steven Lehrer () and Nuno Sousa Pereira

CEF.UP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: Understanding the causes of the dramatic rise in health insurance costs in the United States over the past two decades is of increasing importance to employers and policymakers. While past studies focus primarily on macroeconomic developments and changes in the health sector, little attention has been paid to the changing demographics of individuals working for firms that provide health insurance. We explore the experiences of displaced workers who change jobs for arguably exogenous reasons and decompose the overall effect of health insurance on wages to observed and unobserved components. We find that while there is reduced selection bias due to observed factors, the role of selection based on unobservables has nearly doubled over the last decade suggesting that those who need health insurance shop for it.

Keywords: Health insurance; Worker sorting; Displacement; Comparative advantage; Non-linear instrumental variables. (search for similar items in EconPapers)
JEL-codes: C23 I11 J33 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2005-07
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Persistent link: https://EconPapers.repec.org/RePEc:por:cetedp:0503

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