LABOR MARKETS AND HEALTH BENEFITS: THE OFFER AND RESTRICTIONS ON IT

This study argues that a multidimensional health benefit offer (i.e., offers of medical, dental, sick leave, or vision benefits) and the hours or tenure restrictions placed on it are affected by the relative demand for workers in the local labor market. Using the Bay Area Longitudinal Surveys (BALS), a database of low-skilled jobs, we show that an excess labor demand for workers' skills increases the firm's offer of health benefits and reduces the restrictions on them, while an excess labor supply increases restrictions. These findings suggest that research assessing the correlation between wages, skills, and whether or not a firm offers health insurance might understate the plight of the low-skilled worker since health care access may also be restricted by a failure to receive an array of health benefits and by the restrictions placed on the offer. Furthermore, public policies might place the issues of uninsurance of low-wage workers within the context of a lack of marketable skills since low-skilled workers might be able to enhance their ability to secure jobs that offer an array of health benefits if they acquire skills in short supply in the local labor market. ( JEL J3)     

Housing and unemployment: The search for the “American Dream”

This paper constructs a model of search and bargaining across two different markets: the labor market and the housing market. Interestingly, the model highlights that housing prices and frictions in the housing market have a profound impact on labor market activity through the desire of workers to eventually purchase a home, the “American Dream.” In particular, higher housing prices adversely affect workers’ incentives in the labor market as employment can eventually lead to access to housing through the ability to purchase a home. Similarly, labor market frictions can impact housing market activity. Notably, tighter housing markets are associated with higher unemployment rates and less job creation. Consequently, our work suggests that policymakers should be very careful in implementing policies targeted towards housing – housing markets are likely to generate significant external effects to other sectors of the economy, especially the labor market.     

Cohort crowding: How resources affect collegiate attainment

Analyses of college attainment typically focus on factors affecting enrollment demand, including the financial attractiveness of a college education and the availability of financial aid, while implicitly assuming that resources available per student on the supply-side of the market are elastically supplied. The higher education market in the United States is dominated by public and non-profit production, and colleges and universities receive considerable subsidies from state, federal, and private sources. Because consumers pay only a fraction of the cost of production, changes in demand are unlikely to be accommodated fully by colleges and universities without commensurate increases in non-tuition revenue. For this reason, public investment in higher education plays a crucial role in determining the degrees produced and the supply of college-educated workers to the labor market. Using data covering the last half of the twentieth century, we find strong evidence that large cohorts within states have relatively low undergraduate degree attainment, reflecting less than perfect elasticity of supply in the higher education market. That large cohorts receive lower public subsidies per student in higher education explains this result, indicating that resources have large effects on degree production. Our results suggest that reduced resources per student following from rising cohort size and lower state expenditures are likely to have significant negative effects on the supply of college-educated workers entering the labor market.     

Labor market shocks and retirement: Do government programs matter?

This paper argues that labor market conditions are an important and often overlooked determinant of retirement transitions. In our analysis, we examine how the unemployment rate affects retirement and whether the Social Security (SS) system and Unemployment Insurance (UI) system influence how older workers respond to labor market shocks. We use pooled cross-sectional data from the March Current Population Survey (CPS) in our analysis. We find that downturns in the labor market increase retirement transitions and that the magnitude of this effect is comparable to that associated with moderate changes in financial incentives to retire and to the threat of a health shock facing older workers. Interestingly, retirements only increase in response to an economic downturn once workers become SS-eligible, suggesting that retirement benefits may help to alleviate the income loss associated with a weak labor market. We also estimate the impact of UI generosity on retirement and find little consistent evidence of an effect. This suggests that in some ways SS may serve as a more effective form of unemployment insurance for older workers than UI.     

Scientific personnel reallocation and firm innovation: Evidence from China’s college expansion

Given that the supply of scientific personnel is inelastic, the expansion of public research may negatively influence private research by driving up the wage of scientific personnel and reallocating them away from private sectors. China's massive college expansion since 1999 and labor market segmentation provide us with a unique opportunity to investigate such a reallocation effect on firm innovation. Consistent with the reallocation hypothesis, we find that China's college expansion negatively influenced firm innovation as well as regional innovation in the short run. Moreover, we provide direct evidence on scientific personnel reallocation by finding that when college expansion was more intensive, highly educated laborers were less likely to choose an industrial job, and those working in industries enjoyed a higher wage rate when holding a professional (research related) job.     

The Prospect of Migration,Sticky Wages,and “Educated Unemployment”

An increase in the probability of work abroad, where the returns to schooling are higher than at home, induces more individuals in a developing country to acquire education, which leads to an increase in the supply of educated workers in the domestic labor market. Where there is a sticky wage rate, the demand for labor at home will be constant. With a rising supply and constant demand, the rate of unemployment of educated workers in the domestic labor market will increase. Thus, the prospect of employment abroad causes involuntary “educated unemployment” at home. A government that is concerned about “educated unemployment” and might therefore be expected to encourage unemployed educated people to migrate will nevertheless, under certain conditions, elect to restrict the extent of the migration of educated individuals.     

The transition from paid to self-employment in Canada: the importance of push factors

The share of self-employment in total employment has been growing in Canada throughout the 1990s. Recent research for Canada and elsewhere suggests that some workers may be ‘pushed’ into self-employment as a response to inadequate opportunities in the paid sector. Examining transitions from paid work to selfemployment using the Labour Market Activity Survey, this push hypothesis is tested using a number of indicators of the economic opportunities facing the newly selfemployed. It is found: (i) longer spells of joblessness favour self-employment, (ii) workers who collect unemployment benefits between jobs are less likely to become self-employed than are workers who did not, (iii) workers who left their previous, paid jobs involuntarily - i.e., due to layoff - were more likely to become selfemployed than those who left voluntarily, but less likely than workers who specified personal reasons for leaving, and (iv) self-employment decisions are independent of the health of the labour market as measured by the unemployment rate. These results are generally consistent with the push hypothesis but provide more ambiguous evidence than found in some other studies.     

Market access and occupational upgrading: evidence from the 19th century American transportation network

This article investigates the extent to which county-level market access affects workers’ occupational upgrading and industrial sorting by exploiting the substantial spatial variation and rapid expansion of the United States’ transportation network coverage from 1870 to 1880. First, I find that individuals who enjoyed greater market access in 1880 were more likely to work in higher-paying occupations. Importantly, this result holds across all sectors of employment, for younger and older workers, and for migrants and non-migrants, suggesting that any market size effects on occupational upgrading were not specific to any one group. I also provide results showing that workers were more likely to switch industries within agriculture, but are less likely to do so from manufacturing or services. Finally, I find some evidence of changes to sectoral reallocation, principally away from agriculture, being associated with higher market access. My findings suggest that the expansion of the transportation network in played an important role in determining the type of work Americans performed in the nineteenth century.     

Health insurance and labor market outcomes: Joint decision-making within households

Most Americans obtain access to health insurance through an employer. In this paper, we ask how the link between health insurance and employment affects labor market choices such as whether to work full-time. To understand the effect of the incentives embedded in the employer-based insurance system, we study the joint decision-making of husbands and wives that determines the household's access to health insurance. We estimate the effect on a wife's (husband's) labor market outcomes of husband's (wife's) health insurance, allowing the health insurance of both spouses to be endogenous. Obtaining unbiased estimates of such effects is complicated by the likelihood that positive assortative mating creates correlations between a couple's characteristics and the possibility that there are important unobservable household income effects. Our innovation is to measure these biases by examining a second fringe benefit, paid sick leave, in addition to health insurance. We find that, as predicted, spouse's insurance has statistically significant negative effects on being offered own employer insurance as well as on the probability of working full-time with health insurance.     

A Reexamination of the Time Path of Wage Differentials in Taiwan

Contrary to the conclusions of a recent paper by Chen and Hsu (Review of Development Economics, vol. 5, 2001, pp. 336–54), wage inequality and returns to college‐educated workers have risen in Taiwan since 1980. Government policies which have caused rapid expansion of the supply of new college graduates have depressed returns for only the youngest cohorts of college graduates. Older cohorts of college graduates experienced rising returns, as have college graduates as a whole. Young college‐educated women's returns fell more and older college‐educated women's returns rose more relative to their male counterparts. Consequently, the rising share of women in the labor force helped amplify these trends. Changing trade patterns have tended to increase labor demand in sectors that use educated labor more intensively, helping to raise returns to skill. However, in contrast to western economies, rising capital intensity does not appear to have accelerated the pay gap by skill in Taiwan.     

Who pays the high health costs of older workers? Evidence from prostate cancer screening mandates

Between 1992 and 2009, 30 US states adopted laws mandating that health insurance plans cover screenings for prostate cancer. Because prostate cancer screenings are used almost exclusively by men over age 50, these mandates raise the cost of insuring older men relative to other groups. This article uses a triple-difference empirical strategy to take advantage of this quasi-random natural experiment in raising the cost of employing older workers. Using Integrated Public Use Microdata Series data from the March Supplement of the Current Population Survey, I find that the increased cost of insuring older workers results in their receiving 2.8% lower hourly wages, being 2% less likely to be employed and being 0.7% less likely to have employer-sponsored health insurance.     

HEALTH INSURANCE COVERAGE AND REEMPLOYMENT OUTCOMES AMONG OLDER DISPLACED WORKERS

This article investigates the relationship between health insurance coverage and employment behavior among older workers with an involuntary job loss. It finds that various sources of health insurance are available to mitigate the circumstances where employer-sponsored health insurance is terminated when older workers lose jobs involuntarily. However, older displaced workers remain less likely to be insured than comparable nondisplaced workers by 7.6 percentage points one year after the job loss. The analysis also reveals that having secure health coverage before job displacement is associated with lower probabilities of reemployment and longer postdisplacement nonemployment spells. (JEL I12 , J32 , J63 , J14 )     

Health insurance market reform and employee compensation: The case of pure community rating in New York

Pure community rating, which was enacted to improve access to health insurance in New York's small group market in 1993, prevents carriers from charging different premiums based on the ages of a firm's workers. If small firms were adjusting compensation packages prior to reform to offset higher health care costs of older workers, then community rating could lead to greater relative wages for older workers post reform and not necessarily induce adverse selection that results in changes in who is insured. I present evidence showing that relative wages of older workers in small firms increased in comparison with other states and with large firms within New York following reform.     

Does health insurance reduce illness-related worker absenteeism?

The objective of this article is to examine whether having health insurance reduces illness-related absenteeism among older workers. A nationally representative sample of 1780 workers in the United States, aged 52–64, are drawn from the 2004–2006 Health and Retirement Study (HRS). Binary logistic regressions and censored Tobit models are estimated for workers’ likelihood of missing work days due to illness and the number of illness-related work days missed, respectively, while explicitly addressing the possibility of insurance-selection effects. The findings suggest that over a 12-month period, older workers without health insurance are as likely as insured workers to miss work days due to illness and there are no differences in the number of days missed between insured and uninsured workers. However, there is strong evidence that poor baseline health, onset of new diseases and longer hospitalization significantly increase an older worker's absenteeism at work. These results suggest that having health insurance does not affect illness-related absenteeism among older workers in the US. Future research examining other aspects of worker productivity, such as ‘presenteeism’, and the longer term effects of insurance on productivity can extend our understanding of the role of health insurance in the workplace.     

Labor markets and productivity in developing countries

In middle-income countries, the informal sector often accounts for a substantial fraction of the urban labor force. We develop a general equilibrium model with matching frictions in the urban labor market, the possibility of self-employment in the informal sector, and scope for rural–urban migration. We investigate the effects of labor market institutions, different types of growth, and company taxes on labor market outcomes and aggregate productivity. We quantify these effects by calibrating the model to data for Mexico, and show that matching frictions can lead to a large informal sector when formal sector workers have substantial bargaining power.     

Chronic Diseases, Labor Supply and Medical Expenditure at Older Age: Evidence from China

China has undergone a rapid epidemiological transition from infectious diseases to chronic diseases. Using data from the China Health and Retirement Longitudinal Study (CHARLS), this paper documents the profile of chronic diseases among older Chinese people, estimates the impact of the onset of chronic diseases on the labor supply, and examines the correlation between the prevalence of chronic diseases, a household’s medical expenditure and the role of health insurance in reducing medical costs. Empirical results show that the prevalence of chronic diseases is extremely high among older Chinese people and increases sharply with age. We find significant negative effects from the onset of chronic diseases on an individual’s livelihood at work. The estimation results by age and education suggest that the labor supply of the older and more highly educated people is more sensitive to the onset of chronic diseases. We also show that there can be a substantial indirect loss of individual and household income due to the onset of chronic diseases by limiting the labor supply. We find that the prevalence of chronic diseases is significantly associated with higher out-of-pocket medical expenditure. The reduced-form estimation results suggest that people with insurance have lower medical expenditure caused by minor chronic diseases, but this is only the case for women and urban residents. However, health insurance contributes little in reducing medical expenditure caused by major chronic diseases.     

EMPLOYER‐PROVIDED HEALTH INSURANCE AND JOB MOBILITY: DID THE AFFORDABLE CARE ACT REDUCE JOB LOCK?

Many have argued that concerns over health insurance reduce labor market mobility in the United States, causing a “job lock” effect. We take advantage of the novel natural experiment created by the Affordable Care Act's dependent coverage mandate to estimate the magnitude of the job lock effect for young adults. Using the 2008–2013 Current Population Survey and a difference‐in‐difference research design, we find that the expansion of dependent coverage did not increase job mobility, suggesting that job lock is not a major concern for young adults. (JEL J62, I13, I18)     

The Role of Income Effects in Early Retirement

We provide a long‐term perspective on the individual retirement behavior and on the future of retirement by emphasizing the role of (negative) income effects. We consider a political economic theoretical framework, with actuarially “fair” and “unfair” early retirement schemes, and derive a political equilibrium with positive social security contribution rates and early retirement. A reduction in the wages in youth, consistent with the recent labor market trends since the massive introduction of temporary jobs, induces workers to postpone retirement, and—in the “unfair” system—leads to lower contribution rates. A reduction in the growth rate of the economy has opposite effects on the retirement decisions, leading—in the “unfair” system—to more early retirement. Aging induces a negative income effect, but has also an opposite political effect on social security contributions and retirement decisions. For an actuarially “fair” social security system, we provide conditions for the political effect to dominate; in an “unfair” scheme, numerical simulations confirm a slight predominance of the political effect, as contribution rates increase. These results may shed some light on the future of early retirement in aging societies.     

The effects of home access to technology on computer skills: Evidence from a field experiment

Computer skills are important for educational and labor market success. This paper examines whether disparities in access to home computers are limiting the acquisition of computer skills. To address problems with selection bias, I use data from a randomized field experiment providing free computers for home use to community college students. I find that the treatment group of low-income students receiving free computers has significantly higher levels of computer skills than the control group of low-income students not receiving free computers. The “intent-to-treat” estimates indicate an increase in high-level computer skills of 17% points, and the LATE estimates indicate a range of 19–23% points. The results are robust to estimation strategy, measurement of the dependent variable, and inclusion of different sets of controls. The benefits appear to be the strongest among young, minority, low-income, and female students.