Labor Market Effects of Employer-Provided Health Insurance

Katerina Sherstyuk, Economy, Working Papers

This is an experimental study in economics of mandated benefits. Most individuals who have health insurance in the US obtain it through their employer. Some states either have or are considering government mandates that require employers to provide insurance to all full-time workers. We use an experimental laboratory to investigate possible effects of alternative health insurance regulations on the competitive labor market performance. We find that mandating the insurance for all workers creates labor market distortions; whereas mandating the insurance only for full-time workers leads to a higher coverage then under no mandate, an increased number of part-time workers, but does not necessarily lower market efficiency.

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