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

Abstract

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)