The elusive wage-benefit trade-off: : The case of employer-provided health insurance

• Autores: Jed DeVaro, Nan L. Maxwell
• Localización: International journal of industrial organization, ISSN 0167-7187, Vol. 37, Nº. 1, 2014, págs. 23-37
• Idioma: inglés
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• Resumen

  • This study shows that standard regressions estimated to measure a trade-off between wages and health insurance are misspecified by insufficiently accounting for establishment and firm size; an interactive, size-corrected specification is more likely to reveal a trade-off. Furthermore, because insurance decisions are typically made by firms, and wages set by establishments, the insurance constraint on establishments in multi-establishment firms weakens the trade-off. We use model-generated data to show that both factors contribute to the failure in previous research to identify a trade-off, and data from a cross section of Northern Californian establishments to test for a trade-off in multi-establishment and single-establishment firms.