TAX SUBSIDIES AND THE PROVISION OF HEALTH INSURANCE IN SMALL FIRMS

Mark Stabile

Working Papers from University of Toronto, Department of Economics

Abstract: This paper examines the effects of tax subsidies to employer provided health insurance on the distribution of insurance across firms of different sizes. I present a simple model which shows that the tax subsidies may increase the provision of insurance in smaller firms and hence help equalize the distribution of health benefits across firms. I then test this hypothesis using data in both the United States and Canada. My findings indicate that the subsidies reduce the disparity in coverage levels between large and small firms and promote insurance through the workplace instead of on the private market. These findings imply that the tax subsidies may be distorting the labor market by allowing a number of small firms to offer health insurance.

JEL-codes: H2 I1 (search for similar items in EconPapers)
Pages: 40 pages
Date: 1999-11-11
New Economics Papers: this item is included in nep-ias and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:tor:tecipa:mstabile-99-01

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