An equilibrium model of health insurance provision and wage determination

Matthew S. Dey, Christopher Flinn

    Research output: Contribution to journalReview article

    Abstract

    We investigate the effect of employer-provided health insurance on job mobility rates and economic welfare using a search, matching, and bargaining framework. In our model, health insurance coverage decisions are made in a cooperative manner that recognizes the productivity effects of health insurance as well as its nonpecuniary value to the employee. The resulting equilibrium is one in which not all employment matches are covered by health insurance, wages at jobs providing health insurance are larger (in a stochastic sense) than those at jobs without health insurance, and workers at jobs with health insurance are less likely to leave those jobs, even after conditioning on the wage rate. We estimate the model using the 1996 panel of the Survey of Income and Program Participation, and find that the employer-provided health insurance system does not lead to any serious inefficiencies in mobility decisions.

    Original languageEnglish (US)
    Pages (from-to)571-627
    Number of pages57
    JournalEconometrica
    Volume73
    Issue number2
    StatePublished - Mar 2005

    Fingerprint

    wage determination
    Equilibrium Model
    Wages
    equilibrium model
    health insurance
    Insurance
    Health
    wage
    employer
    welfare economics
    insurance coverage
    Wage determination
    Health insurance
    Bargaining
    Welfare
    conditioning
    Conditioning
    Productivity
    Coverage
    productivity

    Keywords

    • Equilibrium models
    • Health insurance
    • Job mobility
    • Simulated maximum likelihood
    • Wage bargaining

    ASJC Scopus subject areas

    • Mathematics (miscellaneous)
    • Statistics and Probability
    • Economics and Econometrics
    • Social Sciences (miscellaneous)

    Cite this

    An equilibrium model of health insurance provision and wage determination. / Dey, Matthew S.; Flinn, Christopher.

    In: Econometrica, Vol. 73, No. 2, 03.2005, p. 571-627.

    Research output: Contribution to journalReview article

    Dey, MS & Flinn, C 2005, 'An equilibrium model of health insurance provision and wage determination', Econometrica, vol. 73, no. 2, pp. 571-627.
    Dey, Matthew S. ; Flinn, Christopher. / An equilibrium model of health insurance provision and wage determination. In: Econometrica. 2005 ; Vol. 73, No. 2. pp. 571-627.
    @article{28d54391ef134928ac8bb918c9e9079b,
    title = "An equilibrium model of health insurance provision and wage determination",
    abstract = "We investigate the effect of employer-provided health insurance on job mobility rates and economic welfare using a search, matching, and bargaining framework. In our model, health insurance coverage decisions are made in a cooperative manner that recognizes the productivity effects of health insurance as well as its nonpecuniary value to the employee. The resulting equilibrium is one in which not all employment matches are covered by health insurance, wages at jobs providing health insurance are larger (in a stochastic sense) than those at jobs without health insurance, and workers at jobs with health insurance are less likely to leave those jobs, even after conditioning on the wage rate. We estimate the model using the 1996 panel of the Survey of Income and Program Participation, and find that the employer-provided health insurance system does not lead to any serious inefficiencies in mobility decisions.",
    keywords = "Equilibrium models, Health insurance, Job mobility, Simulated maximum likelihood, Wage bargaining",
    author = "Dey, {Matthew S.} and Christopher Flinn",
    year = "2005",
    month = "3",
    language = "English (US)",
    volume = "73",
    pages = "571--627",
    journal = "Econometrica",
    issn = "0012-9682",
    publisher = "Wiley-Blackwell",
    number = "2",

    }

    TY - JOUR

    T1 - An equilibrium model of health insurance provision and wage determination

    AU - Dey, Matthew S.

    AU - Flinn, Christopher

    PY - 2005/3

    Y1 - 2005/3

    N2 - We investigate the effect of employer-provided health insurance on job mobility rates and economic welfare using a search, matching, and bargaining framework. In our model, health insurance coverage decisions are made in a cooperative manner that recognizes the productivity effects of health insurance as well as its nonpecuniary value to the employee. The resulting equilibrium is one in which not all employment matches are covered by health insurance, wages at jobs providing health insurance are larger (in a stochastic sense) than those at jobs without health insurance, and workers at jobs with health insurance are less likely to leave those jobs, even after conditioning on the wage rate. We estimate the model using the 1996 panel of the Survey of Income and Program Participation, and find that the employer-provided health insurance system does not lead to any serious inefficiencies in mobility decisions.

    AB - We investigate the effect of employer-provided health insurance on job mobility rates and economic welfare using a search, matching, and bargaining framework. In our model, health insurance coverage decisions are made in a cooperative manner that recognizes the productivity effects of health insurance as well as its nonpecuniary value to the employee. The resulting equilibrium is one in which not all employment matches are covered by health insurance, wages at jobs providing health insurance are larger (in a stochastic sense) than those at jobs without health insurance, and workers at jobs with health insurance are less likely to leave those jobs, even after conditioning on the wage rate. We estimate the model using the 1996 panel of the Survey of Income and Program Participation, and find that the employer-provided health insurance system does not lead to any serious inefficiencies in mobility decisions.

    KW - Equilibrium models

    KW - Health insurance

    KW - Job mobility

    KW - Simulated maximum likelihood

    KW - Wage bargaining

    UR - http://www.scopus.com/inward/record.url?scp=27744497673&partnerID=8YFLogxK

    UR - http://www.scopus.com/inward/citedby.url?scp=27744497673&partnerID=8YFLogxK

    M3 - Review article

    VL - 73

    SP - 571

    EP - 627

    JO - Econometrica

    JF - Econometrica

    SN - 0012-9682

    IS - 2

    ER -