The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers' Compensation Insurance

48 Pages Posted: 16 Jul 2004 Last revised: 22 Sep 2010

See all articles by Jonathan Gruber

Jonathan Gruber

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); IZA Institute of Labor Economics

Date Written: December 1990

Abstract

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.

Suggested Citation

Gruber, Jonathan and Krueger, Alan B., The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers' Compensation Insurance (December 1990). NBER Working Paper No. w3557. Available at SSRN: https://ssrn.com/abstract=226842

Jonathan Gruber (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Alan B. Krueger

Princeton University - Industrial Relations Section ( email )

Princeton, NJ 08544-2098
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National Bureau of Economic Research (NBER)

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United States

IZA Institute of Labor Economics

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Bonn, D-53072
Germany

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