Workers In Small Firms Research Articles

Is employment group insurance financing of expensive gene therapies threatened in the United States?

Despite the potential of gene therapy to transform the lives of patients with rare genetic diseases, serious concern has been raised about the financing of the high up-front costs for such treatments and about the ability of the employer-sponsored insurance system in the United States, particularly in small firms, to pay for discoveries of this type. In this paper, we provide a conceptual framework and empirical evidence to support the proposition that, at present, private group insurance financing of cost-effective gene therapies is not only feasible and competitively necessary in the labor market for employers, regardless of group size, but also that, currently, the number of US workers in small firms who might be stressed by very high-priced claims is a tiny fraction of the group market for genetic treatments. The current system of employer-paid self-insurance supplemented by stop-loss coverage should be able to facilitate the use of new cost-effective gene therapies. Other alternative methods of financing that have been proposed may not be urgently needed. There are, however, some concerns about the long-term resilience of this system if stop-loss premiums continue to have high growth.

COVID‐19 and employment relief programs: A tale of spatially blind policies for a spatially driven pandemic

AbstractWe use the case of Chile to analyze the effectiveness of a spatially blind employment relief program (hereafter referred to as the LPE program) established by the Chilean government and implemented during the COVID‐19 pandemic. Chile is an interesting case because on the one hand its nonpharmaceutical interventions were spatially driven by health indicators based on small geographical areas; hence, producing sizeable regional and temporal variation of the local conditions induced by the COVID‐19 pandemic. On the other hand, the LPE program was designed and implemented nationally without distinction of local labor market or pandemic conditions, and each firm could decide whether to enroll in the program. By exploiting the spatial‐temporal variation of exogenously imposed lockdowns and using a difference‐in‐differences panel data framework, we find that the LPE program was only effective for a group of regions in the country but, more importantly, that the LPE program was less effective during lockdowns. Moreover, the requirements of the LPE program were vague and did not target specific populations or entities. Consequently, our results suggest that women, informal and small firm workers, and most economic sectors throughout the country were less able to take advantage of the benefits of this program.

Exploring Differences in Work Disability Duration by Size of Firm in Canada and Australia.

Purpose To identify whether there were differences in work disability duration between injured workers employed by small, medium, large, and self-insured firms and whether these differences varied between workers' compensation jurisdictions in Canada and Australia. Methods Workers' compensation data were used to identify comparable lost-time, work-related injury and musculoskeletal disorder claims in five Canadian and five Australian jurisdictions between 2011 and 2015. Work disability duration was measured using cumulative disability days paid up to one-year post-injury. Jurisdiction-specific quantile regression models were used to estimate differences in cumulative disability days paid to claims from small (< 20 full-time equivalents (FTEs)) medium (20-199 FTEs), large (200 + FTEs) and self-insured firms at the 25th, 50th, and 70th percentiles in the disability distribution, adjusting for confounders. Results Compared to large firms, workers in small firms generally had longer work disability duration at each percentile, particularly in Saskatchewan and Alberta (Canada), Victoria and Australian Capital Territory (Australia), where an additional 31.1, 18.4, 58.5 and 37.0days were paid at the 75th percentiles, respectively. The disability duration of workers from self-insured firms was longer than large firms in all Canadian jurisdictions but was shorter or no different in Australian jurisdictions. Smaller differences were observed between claims from large and medium-sized firms. Conclusions Workers in small firms had longer work disability duration than those in large firms in all but one of the study jurisdictions. Claims management processes need to be sensitive to the challenges that small firms face in accommodating and returning injured workers back to work.

Perceived COVID-19 Safety Risk and Safety Behavior on Construction Sites: Role of Safety Climate and Firm Size

This study examined the determinants of COVID-19-related safety behavior (SB) on construction sites in Nigeria. Specifically, the effect of perceived COVID-19 safety risk (PCSR) on SB, the interacting (moderating) effect of firm size (FS) on the relationship between PCSR and SB, and the mechanism through which PCSR leads to SB through the firm’s safety climate (SC) were examined for a sample of 312 construction site workers in Nigeria. The partial least squares structural equation modeling technique was used to analyze the data. The results indicate that PCSR has no significant effect on SB. SC fully mediated the effect of PCSR on SB, while FS moderated the relationship between PCSR and SB, with a stronger effect observed for small firms. It is recommended that a deliberate effort should be made to inculcate a change in the behavior of workers in small firms because of the inverse relationship between PCSR and SB in such firms. This study’s findings contribute to the existing body of knowledge by equipping construction project managers and engineers with much-required information to create a good SC aimed at fostering an acceptable level of SB among construction workers in order to reduce the spread of COVID-19 on construction sites. The study also advances the academic literature on health and safety performance in the construction sector, particularly during pandemics such as COVID-19.

Passthrough of Firm Performance to Income and Employment Stability

To what extent do firms pass through idiosyncratic shocks to their workers? In this paper, we investigate this question focusing on passthrough to income for workers that stay in the firm and passthrough to employment stability. We take an empirical approach and use matched employer-employee data from Denmark, three different measures of firm performance (sales, value added, and value added per worker), and two measures of income (earnings and hourly wages). We distinguish between unemployment and job-to-job transitions. We find that passthrough to income is much higher for permanent (5-9 percent) than transitory (1 percent) shocks. Income passthrough is higher for blue collar workers and workers in small firms. On the employment margin, we find that worse firm performance increases both unemployment and job-to-job transitions. The unemployment risk is especially pronounced for blue collar, low-educated, low tenure workers, while the effect on job-to-job transitions is larger for managers and high-educated workers. We also find clear evidence of non-linearities with negative shocks driving both unemployment and job-to-job transitions.

Does collective bargaining influence the way the size of the firm impacts wage dispersion? Spanish evidence

PurposeThis paper analyses the relationship between wage dispersion and firm size within a “two-tier” system of collective bargaining (firm bargaining and multi-employer bargaining levels). Collective bargaining has a decisive role in setting wages in Spain, and its regulation highly limits the possibility for smaller firms to negotiate their own collective agreement.Design/methodology/approachBased on the Spanish Structure of Earnings Survey 2006, 2010 and 2014, the authors use variance decomposition in order to deeply analyse the effect of bargaining level on wage dispersion and compare the value of each decile of the distribution of wages for the purposes of identifying the quantitative differences in wage compression.FindingsIn general, the outcomes positively linked firm size and firm bargaining to wage dispersion. However, if firm size is taken into account, the effect of firm bargaining is limited among small firm workers because this type of firm is not usually covered by firm bargaining. On the other hand, the time analysis allows observing a wage compression that follows different patterns depending on firm size, compressing the higher part of the distribution in case of small firms and the lower part in case of large firms. This should be explained by the fact that wage negotiation is dependent on firm size.Social implicationsFirm size has determined firm adjustment strategies to face the recent economic crisis and allows to evaluate the impact that changes in collective bargaining can have on wage distributionOriginality/valueThere is no research that has tried to analyse the relationship between wage dispersion and firm size in a context where collective bargaining is essential to understand the wage structure. Normally, firm size plays a decisive role in wage policy given that the capacity of a company to negotiate an agreement is closely linked to its size.

Will the Cadillac Tax Generate Revenue?

When the ACA passed in 2010, the Cadillac tax, a nondeductible 40 percent excise tax imposed on the portion of health coverage costs that exceeds $10,200 for single coverage and $27,500 for family coverage, was scheduled to take effect in 2018. It has since been delayed twice and is currently scheduled to take effect in 2022. At that point, the portion of health coverage costs that exceeds $11,200 for single coverage and $30,150 for family coverage will be subject to the tax. The Cadillac tax is controversial. It is the first time that the historically unlimited tax exclusion for employment-based health benefits has been impacted. Although it has its enthusiasts, there has been bipartisan support for repealing it. In May 2018, the Congressional Budget Office (CBO) estimated that the tax would generate $168 billion in tax revenue from 2022 to 2028. The Joint Tax Committee (JCT) and CBO assume that when employers reduce the comprehensiveness of health benefits to avoid the tax that they will in turn increase worker taxable wages such that total compensation is unchanged. Shifting the composition of compensation toward a higher proportion of taxable wages will translate into additional tax revenue. Repealing the tax would mean finding $168 billion (or the equivalent in today’s dollars) in new tax revenue. Why is understanding the wage-benefit tradeoff so important? Research on the tradeoff has focused almost exclusively on what happens to worker wages when the cost of health insurance increases. The literature on the wage-benefit tradeoff is being used in such a way that it assumes that wage responses to health insurance cuts and health insurance cost increases are symmetric. Only one study on the wage-benefit tradeoff has been found that examines what happens to worker wages when the cost of health insurance decreases, as would be the case with the Cadillac tax. It examined the impact of community rating in New York State on the wages of older workers in small firms, firms that would see premium reductions as a result of community rating, and found that older workers in small firms saw their wages increase relative to workers in large firms and workers in other states. However, it is possible that wages do not respond symmetrically to increases and decreases in the cost of employment-based health insurance. There is evidence of asymmetric effects in other aspects of health care, labor markets, and elsewhere that could inform the economic theory on wage-benefit tradeoffs. Even if workers’ taxable wages do not increase as a result of employers reducing the comprehensiveness of health benefits, the added tax revenue may still be realized. If employers kept the savings and those savings became corporate profits, they might become partially taxable as dividends and increased capital gains, thus producing higher federal tax revenue. If employers use the savings to purchase capital equipment, the seller of that equipment would see higher sales, which would result in federal tax revenue through a combination of profits, higher worker wages from sales bonuses, and worker wages possibly associated with the cost of installing the equipment. If employers used the savings to grow the business and hire additional workers, those workers would be paid wages that were taxable.

Health Benefits In 2017: Stable Coverage, Workers Faced Considerable Variation In Costs.

The annual Kaiser Family Foundation/Health Research and Educational Trust Employer Health Benefits Survey found that in 2017, average annual premiums (employer and worker contributions combined) rose 4percent for single coverage, to $6,690, and 3percent for family coverage, to $18,764. Covered workers contributed 18percent of the premium for single coverage and 31percent for family coverage, on average, although there was considerable variation around these averages. For covered workers in small firms, 10percent did not make a premium contribution for family coverage, while 36percent made a contribution of more than half of their premium. The average worker contribution for family coverage has increased from $4,316 in 2012 to $5,714 in 2017. The share of firms that offered health benefits (53percent) and of workers in those firms covered by their employers' plans (62percent) remain statistically unchanged from 2016.

Direct and Cross Effects of Employment Protection: The Case of Parental Childcare

AbstractI examine whether employment protection affects the willingness of working parents to provide childcare. Using a reform that made it easier for employers to dismiss workers in small firms, I find that softer employment protection reduces the use of temporary parental leave among directly treated fathers. In addition, I find that households respond to an increase in the dismissal risk by reducing temporary parental leave for the indirectly treated spouse. Spousal labor supply can thus serve as informal insurance against adverse income shocks.

Analysis of Workplace Accidents in Automotive Repair Workshops in Spain.

BackgroundTo analyze the effects of the factors associated with different types of injury (superficial wounds, dislocations and sprains, bone fractures, concussion and internal injuries, burns scalding and freezing) caused by occupational accidents in automotive repair workshops.MethodsStudy of a sample consisting of 89,954 industry accidents reported from 2003 to 2008. Odds ratios were calculated with a 95% confidence interval.ResultsBelonging to a small company is a risk factor for suffering three of the five types of injury studied. Women are less likely to suffer burns and superficial wounds, and more likely to suffer dislocations or sprains. Foreign workers are more likely to suffer concussion and internal injuries.ConclusionHealth and safety strategies and accident prevention measures should be individualized and adapted to the type of worker most likely to be injured in each type of accident. Occupational health and safety training courses designed according to worker profile, and improving the participation of the workers in small firms creating regional or roving safety representatives would improve working conditions.

After work shopping? Employment effects of a deregulation of shop opening hours in the German retail sector

This study investigates the impact of a deregulation of shop opening laws on employment in the German retail sector. Exploiting the gradual change in the opening times of shops across states and using data from the German Socio-Economic Panel, difference-in-differences estimates indicate an average increase in the employment probability, driven by a rise in the likelihood of working marginal part-time hours. Workers in small firms are likely to experience a reduction of their propensity to work. For individuals facing high family-related, supply-side constraints, the change in shop opening hours has opposing effects on employment — positive on lower and negative on upper parts of the hours distribution. Overall, the deregulation is estimated to have raised the likelihood of working fewer hours than desired by the workers.

Financing constraints and unemployment: Evidence from the Great Recession

This paper shows that financing constraints of small firms were one of the drivers of unemployment dynamics during the 2007–2009 recession in the United States. Specifically, workers in small firms were more likely to become unemployed during the 2007–2009 recession than comparable workers in large firms, but only if they were employed in industries with high financing needs. We find very similar results for the 1990–1991 recession, but not for the 2001 recession, where only the former was associated with a reduction in loan supply. The findings support the credit constraints hypothesis and underscore the role of bank lending in explaining labor market activity.

Financing constraints and unemployment: evidence from the Great Recession

Exploiting the differential financing needs across industrial sectors, this paper shows that financing constraints of small businesses in the United States are one of the drivers explaining the unemployment dynamics during the Great Recession. We show that workers in small firms are more likely to become unemployed during the 2007-09 financial crisis if they work in industries with high external financing needs. We find very similar results for the 1990-91 recession, but not for the 2001 recession, where only the former was associated with a reduction in loan supply. These findings further support the credit constraints hypothesis.

Health Benefits In 2013: Moderate Premium Increases In Employer-Sponsored Plans

Employer-sponsored health insurance premiums rose moderately in 2013, the annual Kaiser Family Foundation/Health Research and Educational Trust (Kaiser/HRET) Employer Health Benefits Survey found. In 2013 single coverage premiums rose 5 percent to $5,884, and family coverage premiums rose 4 percent to $16,351. The percentage of firms offering health benefits (57 percent) was similar to that in 2012, as was the percentage of workers at offering firms who were covered by their firm's health benefits (62 percent). The share of workers with a deductible for single coverage increased significantly from 2012, as did the share of workers in small firms with annual deductibles of $1,000 or more. Most firms (77 percent), including nearly all large employers, continued to offer wellness programs, but relatively few used incentives to encourage employees to participate. More than half of large employers offering health risk appraisals to workers offered financial incentives for completing the appraisal.

Employment Protection and Parental Child Care

I examine if employment protection affects parental childcare. I find that a softer employment protection has a substantial effect on how parents use and divide paid childcare between them. The identification relies on a reform that made it easier for employers in Sweden to dismiss workers in small firms. I estimate that a softer employment protection reduces the total days of parental childcare in targeted firms, measured as total days of parental leave or temporary parental leave. Both a sorting effect and a behavioral effect can explain the reduced childcare. I also find evidence of a redistribution effect of paid parental childcare within households if only one partner was affected by the reform. I interpret the redistribution effect as a way of evading an external cost on the child.

Heterogeneity in Returns to Investment in Education in Egypt

The paper estimates the rates of return to investment in education in Egypt, allowing for multiple sources of heterogeneity across individuals. The paper finds that, in the period 1998–2006, returns to education increased for workers with higher education, but fell for workers with intermediate education levels; the relative wage of illiterate workers also fell in the period. This change can be explained by supply and demand factors. On the supply side, the number of workers with intermediate education, as well as illiterate ones, outpaced the growth of other categories joining the labor force during the decade. From the labor demand side, the Egyptian economy experienced a structural transformation by which sectors demanding higher-skilled labor expanded. In Egypt, individuals are sorted into different educational tracks, creating the first source of heterogeneity. Second, the paper finds that large-firm workers earn higher returns than small-firm workers. Third, females have larger returns to education. Formal workers earn higher rates of return to education than those in the informal sector, which did not happen a decade earlier. And finally, those individuals with access to technology (as proxied by personal computer ownership) have higher returns.

Minimum wages, wages and employment in various sectors in Honduras

This paper contributes to our understanding of the impact of minimum wages on labor markets of developing countries, where there are often multiple minimum wages and compliance is weak. We examine how changes in more than 22 minimum wages over 1990–2004 affect employment, unemployment and average wages of workers in different sectors, defined by coverage under the legislation. The evidence suggests that minimum wages are effectively enforced only in medium and large-scale firms, where a 1% increase in the minimum wage leads to an increase of 0.29% in the average wage and a relatively large reduction in employment of − 0.46%. We find that public sector wages emulate minimum wage trends but the higher cost of labor does not reduce employment there. There are no discernable effects of minimum wages on the wages of workers in small-firms or the self-employed; yet, higher minimum wages may create more unemployment. We conclude that (even under our upper bound estimate of the effect on the wages of workers) the total earnings of workers in the large-firm covered sector fall with higher minimum wages in Honduras, which warrants a policy dialogue on the structure and level of minimum wages.

The Small Firm Effect and the Entrepreneurial Spawning of Scientists and Engineers

Scientists and engineers in small firms are far more likely than their large firm counterparts to enter entrepreneurship. We label this phenomenon the small firm effect and explore its origins. In particular, we identify four classes of explanations for the small firm effect—preference sorting, ability sorting, opportunity cost, and the possibility that workers in small firms develop entrepreneurial human capital—and examine the empirical evidence for each. We find that preference sorting does play a role in generating the small firm effect: small firms attract those with prior preferences for autonomy who are similarly drawn into entrepreneurship. Similarly, ability sorting plays a role: those who ultimately become entrepreneurs may be drawn first to small firms because they offer tighter pay-for-performance links and can subsequently improve their expected earnings by becoming entrepreneurs, or because the skills required for success in small firms are also valuable in entrepreneurship. Evidence suggests that although those with the very least to lose do enter entrepreneurship with greater frequency, opportunity cost has at best a modest role to play in explaining the small firm effect. Finally, we interpret evidence that prior experience in small firms predicts positive performance outcomes in the early stages of entrepreneurship as suggesting that workers in small firms may develop entrepreneurial human capital that makes them better entrepreneurs. This effect may be largest among those of high ability.

The Small Firm Effect and the Entrepreneurial Spawning of Scientists and Engineers

Scientists and engineers in small firms are far more likely than their large firm counterparts to enter entrepreneurship, a phenomenon we label the small firm effect. We explore the origins of this small firm effect, identify four classes of explanations - preference sorting, ability sorting, opportunity cost, and the possibility that workers in small firms develop entrepreneurial human capital - and exploring these empirically, by examining the determinants of entrepreneurial entry and performance. We find that preference sorting plays a role in generating the small firm effect: small firms attract those with prior preferences for autonomy, who are similarly drawn into entrepreneurship. Similarly, ability sorting plays a role: those who ultimately become entrepreneurs may be drawn to small firms because the offer tighter pay-for-performance links and are drawn to entrepreneurship for the same reason, or because the skills required for success in small firms are also valuable in entrepreneurship. Evidence suggests that, while those with the very least to lose enter entrepreneurship with greater frequency, opportunity cost has at best a small role to play in explaining the small firm effect. Finally, we interpret evidence that prior experience in small firms predicts positive performance outcomes in the early stages of entrepreneurship as suggesting that employment in a small firm also appears to make these workers better entrepreneurs. This effect may be largest among those of high ability.

The U.S. Economy And Changes In Health Insurance Coverage, 2000–2006

The number of uninsured Americans increased by 3.4 million between 2004 and 2006, despite improving economic conditions. In the first four years of the decade, during a period of economic recession, the number increased by 6.0 million. The dominant factor in both periods was a decline in employer-sponsored insurance coverage. Although the recent decline was less than that experienced from 2000 to 2004, growth in public coverage was small, and the number of uninsured people increased by 1.0 million children and 2.4 million adults. Employer coverage declined most for self-employed or small-firm workers, in the South, and among noncitizens.