The Employment & Distributional Effects of Mandated Benefits

  • Title:

    The Employment & Distributional Effects of Mandated Benefits
  • Paperback ISBN:

    0-8447-7021-3
  • Paperback Dimensions:

    5.5'' x 8.5''
  • 35 Paperback pages
  • Buy the Book

Free health benefits like free lunches are wishful thinking. There is no way to extend health insurance coverage to millions of people without paying for it. The employer mandate put forth in the Clinton health plan seems a poor way to pay the health bill. True, it would guarantee insurance to 18 million workers who now lack it. But this insurance will not be a gift, as the workers themselves will be compelled to pay for it through lower wages, and where wage rollbacks are infeasible, through reductions in employment.

The employer subsidies added to the Clinton mandate would reduce the share of the bill paid through the employer, and therefore they would ameliorate job loss and wage rollbacks. But the subsidies are not enough to eliminate job loss and wage rollbacks, which remain significant. The subsidies also come at a price. In addition to increasing budget expenditures by $40 billion, the subsidy scheme generates inefficient reorganization of business, creating peculiar incentives to form small firms and to segregate high-skill and low-skill workers. These market distortions would not be present if increased health coverage were provided to low-income families through direct subsidies rather than through an employer mandate.

This study draws on material in June E. O'Neill and Dave M. O'Neill, The Impact of a Health Insurance Mandate on Labor Costs and Employment: Empirical Evidence (Employment Policies Institute, 1993).

Also Visit
AEIdeas Blog The American Magazine

What's new on AEI

Expanding opportunity in America
image Moving beyond fear: Addressing the threat of the Islamic state in Iraq and Syria
image Foreign policy is not a 'CSI' episode
image The Air Force’s vital role
AEI on Facebook
Events Calendar
  • 21
    MON
  • 22
    TUE
  • 23
    WED
  • 24
    THU
  • 25
    FRI
Monday, July 21, 2014 | 9:15 a.m. – 11:30 a.m.
Closing the gaps in health outcomes: Alternative paths forward

Please join us for a broader exploration of targeted interventions that provide real promise for reducing health disparities, limiting or delaying the onset of chronic health conditions, and improving the performance of the US health care system.

Monday, July 21, 2014 | 4:00 p.m. – 5:30 p.m.
Comprehending comprehensive universities

Join us for a panel discussion that seeks to comprehend the comprehensives and to determine the role these schools play in the nation’s college completion agenda.

Tuesday, July 22, 2014 | 8:50 a.m. – 12:00 p.m.
Who governs the Internet? A conversation on securing the multistakeholder process

Please join AEI’s Center for Internet, Communications, and Technology Policy for a conference to address key steps we can take, as members of the global community, to maintain a free Internet.

Thursday, July 24, 2014 | 9:00 a.m. – 10:00 a.m.
Expanding opportunity in America: A conversation with House Budget Committee Chairman Paul Ryan

Please join us as House Budget Committee Chairman Paul Ryan (R-WI) unveils a new set of policy reforms aimed at reducing poverty and increasing upward mobility throughout America.

Event Registration is Closed
Thursday, July 24, 2014 | 6:00 p.m. – 7:15 p.m.
Is it time to end the Export-Import Bank?

We welcome you to join us at AEI as POLITICO’s Ben White moderates a lively debate between Tim Carney, one of the bank’s fiercest critics, and Tony Fratto, one of the agency’s staunchest defenders.

Event Registration is Closed
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.