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Observations on Employment-Based Government Mandates, With Particular Reference to Health Insurance

Author

Listed:
  • Alan B. Krueger

    (Princeton University and NBER)

Abstract
This paper provides several observations on the impact of employment-based government mandates on job characteristics, wages, and employment. Special attention is devoted to evaluating the effects of mandated health insurance because health care is the largest government mandate potentially on the horizon. In some situations, mandates may be useful to solve adverse selection problems, and to compel firms to internalize the social costs, of production. Moreover, in a world with pre-existing distortions, mandates may reduce other inefficiencies. However, it is concluded that in many situations the optimal way for a government to assure that services are provided is probably not through employment-based mandates. In many situations, mandates are utilized because alternative schemes are politically infeasible. Nevertheless, since the labor supply curve is widely believed to be fairly inelastic, in the long run employers' costs of meeting government mandates are likely to be shifted to employees in the form of lower wages. Cost shifting to employees is expected to moderate the reduction in jobs due to government mandates.

Suggested Citation

  • Alan B. Krueger, 1994. "Observations on Employment-Based Government Mandates, With Particular Reference to Health Insurance," Working Papers 702, Princeton University, Department of Economics, Industrial Relations Section..
    • Handle: RePEc:pri:indrel:323
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    Citations

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    Cited by:

    1. Christopher J. Ruhm, 1998. "The Economic Consequences of Parental Leave Mandates: Lessons from Europe," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(1), pages 285-317.
    2. Norman K. Thurston, 1997. "Labor Market Effects of Hawaii'S Mandatory Employer-Provided Health Insurance," ILR Review, Cornell University, ILR School, vol. 51(1), pages 117-135, October.
    3. Christopher J. Ruhm & Jackqueline L. Teague, 1995. "Parental Leave Policies in Europe and North America," NBER Working Papers 5065, National Bureau of Economic Research, Inc.
    4. Addison, John T. & Barrett, Charles Richard & Siebert, William Stanley, 1998. "Mandated benefits, welfare, and heterogeneous firms," ZEW Discussion Papers 98-46, ZEW - Leibniz Centre for European Economic Research.
    5. Dwight Lee & Ronald Warren, 1999. "Mandated health insurance and the low-wage labor market," Journal of Labor Research, Springer, vol. 20(4), pages 505-515, December.

    More about this item

    Keywords

    mandated benefits; health insurance;

    JEL classification:

    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other

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