The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers' Compensation Insurance
Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)
Alan B. Krueger
Princeton University - Industrial Relations Section; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)
NBER Working Paper No. w3557
Workers' compensation insurance provides cash payments and medical benefits to workers who incur a work-related injury or illness. Many features of the workers' compensation program parallel features of proposed mandated employer-paid health insurance plans. This paper empirically examines the incidence of the workers' compensation program to infer the likely consequences of mandated health insurance proposals. In certain industries, such as trucking and carpentry, workers' compensation insurance costs are quite large, and vary tremendously within states over time, and across states at a moment in time. This variation is used to identify the incidence of the program. Empirical analysis of two data sets suggest that changes in employers' costs of workers' compensation insurance are largely shifted to employees in the form of lower wages. In addition, higher insurance costs are found to have a negative but statistically insignificant effect on employment. The implied elasticity of labor demand from our results is about -.50.
Number of Pages in PDF File: 48working papers series
Date posted: July 16, 2004
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