Keywords
health insurance costs, work hours, employment composition
Abstract
Increases in the cost of providing health insurance must have some effect on labor markets, either in lower wages, changes in the composition of employment, or both. Despite a presumption that most of this effect will be in the fonn of lower wages, we document in this paper a significant effect on work hours as well. Using data from the CPS and the SIPP, we show that rising health insurance costs over the 1980s increased the hours worked of those with health insurance by up to 3 percent. We argue that this occurs because health insurance is a fixed cost, and as it becomes more expensive to provide, firms face an incentive to substitute hours per worker for the number of workers employed.
Original Publication Citation
“Labor Market Responses to Rising Health Insurance Costs: Evidence on Hours Worked.” RAND Journal of Economics, 1998, 29(3): 509-530 (with David Cutler). http://www.jstor.org/stable/2556102
BYU ScholarsArchive Citation
Cutler, David M. and Madrian, Brigitte C., "Labor Market Responses to Rising Health Insurance Costs: Evidence on Hours Worked" (1998). Faculty Publications. 9096.
https://scholarsarchive.byu.edu/facpub/9096
Document Type
Peer-Reviewed Article
Publication Date
1998
Publisher
RAND Journal of Economics
Language
English
College
Marriott School of Business
Department
Finance
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