The Effects of Mandating Benefits Packages

36 Pages Posted: 18 Apr 2007 Last revised: 30 Nov 2022

See all articles by Olivia S. Mitchell

Olivia S. Mitchell

University of Pennsylvania - The Wharton School; University of Pennsylvania - The Wharton School, Pension Research Council; National Bureau of Economic Research (NBER)

Date Written: February 1990

Abstract

This paper identifies and, where possible, quantifies potential labor market consequences of government mandating of employee benefits. The author argues that mandating benefits could increase benefit coverage and generosity for numerous workers and their families. However, even when mandating benefits does improve benefit provision, there will be offsetting effects including wage and other benefit cuts, reduced work hours, reduced employment, and possibly output reductions in covered sectors. Employer bias against "expensive to insure" workers may also result, producing labor market sorting and segmentation. In addition, many workers currently without benefit coverage are employees of small firms, women, pan-time and minimum wage workers. Frequently, mandated benefit proposals exclude or reduce coverage for these workers to alleviate the financial burden on small firms. As a result, many uninsured people will not be helped by the type of mandated employee benefit program currently under review. A separate approach would probably be needed to meet the needs of those not covered by mandated benefit programs.

Suggested Citation

Mitchell, Olivia S., The Effects of Mandating Benefits Packages (February 1990). NBER Working Paper No. w3260, Available at SSRN: https://ssrn.com/abstract=980906

Olivia S. Mitchell (Contact Author)

University of Pennsylvania - The Wharton School ( email )

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University of Pennsylvania - The Wharton School, Pension Research Council ( email )

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