the importance of group coverage how tax policy shaped u s health insurance in 1954 the internal revenue service stipulated that employer contributions to the health insurance plans of their employees were to be excluded from employee taxable income today the tax subsidy is major feature of the u s health care market this paper examines the initial effects of the tax subsidy on the demand for health insurance using previously unexamined data from 1953 and 1958 results suggest that the tax subsidy increased the growth of group insurance particularly among union members and employed persons this is a critical effect because group insurance is not only less expensive than individual insurance but it is also easier to obtain and households with access to group health insurance are far more likely to purchase health insurance coverage than those without similar access by increasing access to group insurance the tax subsidy fostered an increase in the purchase of group health insurance by people who may not have purchased individual coverage and generated institutional change as it cemented an employment based system of group health insurance in the united states this abstract was borrowed from another version of this item

seigniorage operating rules and the high inflation trap there may be both a high and a low inflation equilibrium when the government finances the deficit through seigniorage under rational expectations the high inflation equilibrium is stable and the low inflation equilibrium unstable under adaptive expectations or lagged adjustment of money balances with rational expectations the low inflation equilibrium may be stable adding bond financing dual equilibria remain if the government fixes the real interest rate but a unique equilibrium is attained when the government sets a nominal anchor for the economy the existence of dual equilibria is thus a result of the government s operating rules

inflexible rules in incentive problems in practice contracts involve standard terms or rules allowing for variations only under exceptional circumstances we develop a simple model in which optimal contracts display this feature even in the absence of transactions costs rules arise when an agent has countervailing incentives to misrepresent private information these incentives are created by endowing the agent with a critical factor of production ex ante applications in regulatory labor and legal settings

agent discretion and the choice of insurance marketing system this article argues that different insurance marketing organizations arise as a means to minimize the costs of correctly matching policyholder risks with insurance coverage when policyholders are easily sorted without sales agent participation in screening exclusive dealing will be the preferred marketing organization when agent information is important for risk placement independent agency may be preferred empirical support for our theory is obtained from analysis of compensation contracts and market shares of the different marketing forms exclusive dealers are found to be prevalent in relatively standardized homogeneous product lines and markets and their agents receive less profit based compensation than those of independent agency insurers these findings are consistent with our theory

from the fringe to the fore labor unions and employee compensation conventional wisdom suggests that labor unions raise worker wages while the newer empirical literature finds only negligible earnings effects i reconcile this apparent contradiction by arguing th

gender differences in labor market decisions evidence from rural mexico this study examines gender employment differences in mexicos rural sector using the 1994 survey of rural entrepreneurs and financial services it employed an approach that separate the effects of initial endowments from the gender differences that can be attributed to preferences available opportunities labor market discrimination and other market conditions all of which referred to as labor market structural issues findings show that higher levels of education are associated with a higher employment propensity although the variable for some secondary schooling is not significant for men as expected married men are more likely to be employed than single men while for females the opposite results ensues which indicate that women in rural areas tend to specialize in non market activities particularly after marriage also gender differences in labor market experience proxied by age seems to influence the self employment choice these results have implications for public policy aimed at reducing gender inequality in labor market outcomes in rural mexico the main lesson is that policies that focus solely on individual endowments could have a limited impact on reducing gender inequality if they are not accompanied by policies addressing structural supply and demand factors that are unique to the study population and that influence the choice of women to enter and remain in the workforce

pension coverage and retirement savings of young and prime aged workers in canada 1986 1997 in this paper we assemble data from several household surveys to document how pension coverage of young and prime aged workers has evolved in canada between the mid 1980s and the mid 1990s we show that between 1986 and 1997 pension coverage has fallen significantly for men has dropped slightly for young women and has increased for prime aged women the decline in union density and employment shifts towards low coverage industries explain most of the decline in pension coverage of men and young women in contrast most of the increase in coverage of prime aged women remains unexplained while pension coverage has fallen for men and young women their real average contributions to registered retirement savings plan rrsps have increased substantially as a result the sum of the amounts they contributed to registered pension plans rpps and rrsps has increased markedly jel classification j26 j32 couverture des regimes de rentes et epargnes pour la retraite des travailleurs jeunes et de ceux dans la force de l ge au canada 1986 1997 dans ce memoire les auteurs assemblent des donnees de plusieurs enquetes sur les menages pour documenter l evolution de la couverture des regimes de rentes des travailleurs jeunes et dans la force de l ge entre le milieu des annees 80 et le milieu des annees 90 on montre que cette couverture a chute de maniere significative pour les hommes a decline legerement pour les femmes et s est accrue pour les femmes dans la force de l ge la chute du taux de syndicalisation et les deplacements de l emploi vers des secteurs ou la couverture est plus faible expliquent le gros du declin de couverture pour les hommes et les jeunes femmes quant a l accroissement de la couverture pour les femmes dans la force de l ge il demeure inexplique alors que la couverture des deux premiers groupes a decline leurs contributions aux regimes enregistres d epargne retraite reer ont augmente substantiellement en consequence le total des sommes qu ils ont contribuees aux regimes de rentes enregistres et aux reer ont augmente de maniere importante

female participation and labor market attachment in rural canada this article explores the reasons for differences in female rural urban participation rates by estimating a dynamic model of participation allowing for unobserved heterogeneity and state dependence using canadian panel data the results suggest that overall observed differences in rural urban participation rates are primarily due to differences in observed socioeconomic characteristics however for women resident in low income households there is evidence that the operation of rural labor markets effectively lowers their participation rates copyright 2002 oxford university press

the competitive effects of exclusive dealing evidence from the u s beer industry abstract several recent theoretical articles have modeled the effects of exclusive dealing contracts that restrict dealers to selling a single brand yet detailed empirical analysis of the impact of exclusivity on actual market outcomes has been lacking i analyze a unique set of firm level data on nearly 400 beer distributors in the united states the impacts of economies of scale and restrictions on distributor promotional activities on the use of exclusive dealing are measured as well as the effects of exclusivity on costs prices and output the results support the view that exclusive dealing serves to minimize manufacturer dealer incentive conflicts and enhances social welfare

discrimination and detailed decomposition in a logit model abstract the paper suggests how to use the logit model to decompose the gender difference in the probability of an occurrence the technique is illustrated by an analysis of formal sector employment in urban zambia

cost function estimation and quality bias the regulated automobile insurance industry this article explores the implications of endogenous product quality and therefore endogenous output in the empirical estimation of cost functions for regulated automobile collision insurance firms it contains a structural model of such a firm and provides an illustration of the types of biases that can result if data on quality of service are unavailable or otherwise omitted the analysis shows how the directions of biases depend on the nature of the variations in the observed nonquality data a new test suggests that such bias is present in insurance cost functions

when will the gender gap in retirement income narrow among recent retirees women receive substantially less retirement income from social security and private pensions than men increases in women s labor market attachment and earnings relative to men over the past 50 years provide some optimism for an improvement in female retirement income particularly for married women this study shows that women s income from social security and private pensions has improved only slightly relative to men over the past 25 years using data on people approaching retirement age over the next 20 years prospects for future improvement are investigated one of the main conclusions is that pension income among women particularly married women will rise sharply relative to men s over the next few decades but a substantial gap could remain even if women close the gap in experience and salaries

adverse selection private information and lowballing in insurance markets recent contributions to the adverse selection literature have focused on a multiperiod competitive environment in this setting a clean distinction arises between the predictions of competing models cooper and hayes extend the model of rothschild and stiglitz to multiple periods the result is a self selecting equilibrium characterized by price highballing or systematically overcharging new business kunreuther and pauly suggest that information asymmetries between competing insurance firms render such price quantity policies infeasible their model results in a pooling equilibrium that is characterized by price lowballing or systematically undercharging new business our evidence is consistent with the kunreuther and pauly model and reveals the persistence of adverse selection in the automobile insurance market copyright 1990 by the university of chicago

inflationary finance under discrepion and rules inflationary finance involves first the tax on cash balances from expected inflation and second a capital levy from unexpected inflation from the standpoint of minimizing distortions these capital levies are attractive ex post to the policymaker in a full equilibrium two conditions hold 1 the monetary authority optimizes subject to people s expectations mechanisms and 2 people form expectations rationally given their knowledge of the policymaker s objectives the outcomes under discretionary policy are contrasted with those generated under rules in a purely discretionary regime the monetary authority can make no meaningful commitments about the future behavior of money and prices under an enforced rule it becomes possible to make some guarantees hence the links between monetary actions and inflationary expectations can be internalized there is a distinction between fully contingent rules and rules of simple form a simple rule allows the internalization of some connections between policy act ion and inflationary expectations but discretion permits some desirable flexibility of monetary growth this abstract was borrowed from another version of this item

why do smaller firms pay less this paper uses data from the national longitudinal survey of young men and the current population survey for 1983 to examine the relationships among wages firm size and plant size we reach three key findings first plant size has little independent effect on wages once we have controlled for firm size for firms with fewer than 1 000 employees second we find evidence of sorting on observed and unobserved ability characteristics across firm sizes better educated and more stable workers are in larger firms third results from a first difference estimator indicate that about 60 percent of the wage size effect is due to unobserved heterogeneity when all firms are considered and about 100 percent when firms with 25 or more employees are considered

poverty among minorities in the united states explaining the racial poverty gap for blacks and latinos the two largest minorities in the united states african americans and people of hispanic origin show official poverty rates at least twice as high as those of non hispanic whites these similarly high poverty rates between the two minorities are however the result of different combinations of factors related to the specific characteristics of these two groups in this article we analyse the role of demographic and labour related variables in the current differential of poverty rates among racial and ethnic groups in the united states and its recent evolution our results show first that these differentials are largely explained by differing family characteristics of the ethnic groups furthermore we show that while labour market activity of family members and a preponderance of single mothers play a more significant role in the higher poverty rates of blacks a larger number of dependent children is closely associated with higher poverty among latinos who also suffer from a larger educational att

inflationary rigidities and orthodox stabilization policies lessons from latin america orthodox stabilization programs in latin american countries have been notoriously unsuccessful in combating inflation despite the imposition of stringent cuts in government deficits in most cases inflation came down only slowly and temporarily with concomitant declines in growth and employment the bolivian program one of the only latin american successes is contrasted with those of argentina brazil chile and mexico the problems of dealing with chronic inflation are compared with those of hyperinflationary countries and the influence of price and wage rigidities expectations and credibility is explored the study shows that fiscal restraint is a necessary but not sufficient condition for success and that sound management of nominal variables the exchange rate and money supply are also necessary the critical role of credibility is linked with price and wage rigidities in the chronic inflation countries whereas the unsuitability of hyperinflation is seen to increase the credibility of and thus the potential for successful stabilization programs

a policy game approach to the high inflation equilibrium abstract the high inflation equilibrium hie refers to a steady state solution where inflation is higher than the one which maximizes seigniorage i e inflation is on the falling segment of the laffer curve it has been claimed that the hie can be stable when the adjustment of expectation is fast however adjustment is fast because inflation is high so the argument is circular in this paper we rationalize the hie using the policy game approach which distinguishes between discretionary and precommitment regimes we expand and demonstrate rigorously using a technique developed by obstfeld barro s suggestion that a hie may result from a discretionary regime we show that this is not possible under precommitment in addition we demonstrate that a hie may result from non fiscal factors such as the motivation to reduce unemployment in a discretionary regime we conclude with a simple diagrammatic exposition of the difference between our approach and the previous one

exclusive vs independent agents a separating equilibrium approach abstract we provide a separating equilibrium explanation for the existence of the independent insurance agent system despite the potentially higher costs of this system compared to those of the exclusive agents system or direct underwriting a model is developed assuming asymmetric information between insurers and insureds the former do not know the riskiness of the latter we also assume that the claims service provided by the independent agent system to its clients is superior to that offered by direct underwriting system that is insureds using the independent agent system are more likely to receive reimbursement of their claims competition compels the insurers to provide within their own system the best contract to the insured it is shown that in equilibrium the safer insureds choose direct underwriting whereas the riskier ones choose independent agents the predictions of the model agree with previous research demonstrating that the independent agent system is costlier than direct underwriting the present model suggests that this does not result from inefficiency but rather from self selection the empirical implication of this analysis is that ceteris paribus the incidence of claims made by clients of the independent agents system is higher than that of clients of direct underwriting implications for the coexistence of different distribution systems due to unbundling of services in other industries such as brokerage houses and the health care industry are discussed

explaining the decline in the offer rate of employer retirement plans between 2003 and 2012 workplace retirement plans deferred compensation plans dcs and deferred benefit plans dbs help workers save for retirement conveniently consistently and automatically but the percentage of

disability and the labour market an analysis of british males this paper attempts using data from the british labour force survey 1996 to examine to what extent differences in labour market outcomes between able bodied and disabled men may be attributed to differences in endowments of human capital and associated productivity differences both labour force participation and selectivity corrected human capital equations are estimated and decomposition techniques applied to them using the methodology of baldwin and johnson baldwin m johnson w g 1994 labor market discrimination against men with disabilities journal of human resources xxix 1 winter 1 19 the employment effects of wage discrimination against the disabled are also estimated evidence of both substantial wage and participation rate differences between able bodied and disabled men are found which have implications for the operation of the 1995 disability discrimination act

stock versus mutual ownership structures the risk implications this article provides empirical tests of the risk differences between two types of ownership structure in the property liability insurance industry empirical evidence is provided that suggests stock insurers have more risk than mutuals where the risk inherent in future cash flows is proxied by the variance of the loss ratio further evidence suggests that stock insurers write relatively more business than do mutuals in lines and states having higher risk copyright 1993 by university of chicago press

plant size and the decline of unionism abstract declining plant size is shown to explain a significant portion of the recent decline in unionism particularly in manufacturing the paper also shows how to use the probit model to decompose the change in unionism into explained and unexplained components

the coexistence of distribution systems under price search theory and some evidence from insurance abstract this paper analyzes a pure price search model of an insurance market in which two different search technologies are simultaneously available sequential search and nonsequential search sequential search characterizes firms that sell directly to consumers and nonsequential search characterizes firms who use independent agents that sell the products of a number of different firms the separation of firms and consumers into the two market sectors is endogenously determined and the conditions for equilibrium coexistence are derived the characteristics of price distributions in the two sectors are then compared in a coexistence equilibrium price distributions observed in automobile insurance markets are found to be consistent with the predictions of the theoretical model

union membership determination and industry characteristics recent literature on the economics of unionism has expanded beyond its customary focus on the wage and nonwage effects of collective bargaining and given increased attention to the determinants of union membership previous union membership studies have been couched primarily within an individual choice framework whereby utility maximizing individuals choose either to join or not to join a union empirical work typically treats membership as a function of some vector of personal characteristics 1 2 10 11 21 it is our contention that such studies can best be interpreted as explaining the determination of the union status of jobs and that several industry and firm characteristics in addition to personal characteristics can be expected to affect significantly union membership in this paper theory and evidence relating to the effects of firm and industry characteristics on union membership are presented industry level data are bridged with a large microdata set containing individual characteristics in order to examine the determinants of unionism among workers in manufacturing utilizing a simultaneous model and controlling for sample selection bias we find that product market concentration capital intensity establishment size and job risk significantly affect the likelihood of union membership