Health Insurance and the Wage Gap

• Published in: NBER Working Paper Series p. 11975
• Main Author: Levy, Helen
• Format: Paper
• Language: English
• Published: Cambridge National Bureau of Economic Research, Inc 01.01.2006
• Subjects: Compensation; Economic theory; Education; Employee benefits; Employers; Ethnicity; Expenditures; Gender; Health insurance; Hispanic people; Immigrants; Inequality; Insurance coverage; Labor market; Maternity & paternity leaves; Noncitizens; Race; Uninsured people; Wage differential; Wages & salaries; White people; Workers
• DOI: 10.3386/w11975
• ISSN: 0898-2937

Working Paper No. 11975 Estimates of labor market inequality usually focus only on wages, even though fringes account for almost one-third of total compensation. Using data from the Current Population Survey, I analyze coverage by own-employer health insurance coverage among full-time workers for women versus men, blacks versus whites and Hispanics versus whites. I find significant gaps in coverage for each of these groups. About two-thirds of the gap for blacks or Hispanics is explained by differences in observable characteristics (primarily education and occupation). The gap for women is not explained by controlling for observables. Looking over the 20 year period from 1980 to 2000, I find that the adjusted gap in own-employer coverage for women has been relatively flat over this period and is consistently much smaller than the male/female wage gap (about half as large), so that measuring inequality in wages plus health insurance would result in a smaller estimate of male/female compensation inequality than measuring wages alone. The same is generally true for blacks although their health insurance gap is much closer in magnitude to their wage gap. For Hispanics, the health insurance gap is nearly identical to the wage gap and both are increasing over time.