Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 11, Problem 8P
(a)
To determine
Effect of providing insurance to every worker on labor
(b)
To determine
Effect of an increase in wage on the supply of labor.
(c)
To determine
Effect of Affordable Care Act on the equilibrium wage and labor in the market.
(d)
To determine
Effect on equilibrium labor and wage when workers value the insurance to be worth less than a dollar.
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The following is an excerpt from "The Labor Market Effects of Rising Health Insurance Premiums," by Katherine Baicker, Amitabh Chandra.
We estimate the effect of rising health insurance premiums on wages, employment, and the distribution of part‐time and full‐time work using variation in medical malpractice payments driven by the recent “medical malpractice crisis.” We estimate that a 10% increase in health insurance premiums reduces the aggregate probability of being employed by 1.2 percentage points, reduces hours worked by 2.4%, and increases the likelihood that a worker is employed only part time by 1.9 percentage points. For workers covered by employer provided health insurance, this increase in premiums results in an offsetting decrease in wages of 2.3%.
This finding is consistent with the presence of ____.
a. adverse selection
b. community rating
c. risk selection
d. wage pass-through
The following is an excerpt from "The Labor Market Effects of Rising Health Insurance Premiums," by Katherine Baicker, Amitabh Chandra.
We estimate the effect of rising health insurance premiums on wages, employment, and the distribution of part‐time and full‐time work using variation in medical malpractice payments driven by the recent “medical malpractice crisis.” We estimate that a 10% increase in health insurance premiums reduces the aggregate probability of being employed by 1.2 percentage points, reduces hours worked by 2.4%, and increases the likelihood that a worker is employed only part time by 1.9 percentage points. For workers covered by employer provided health insurance, this increase in premiums results in an offsetting decrease in wages of 2.3%.
This finding is consistent with the presence of ____.
The following question asks about what happens to employment (Q), wages (W), and total
compensation (T) when firms begin offering health insurance benefits. Without health insurance
benefits, the labor supply curve in terms of wages is given by W 6 + Q, and the labor demand
curve in terms of wages is W = 10 - Qp. Q here is hours of work. W is wages in dollars per hour.
Assume that workers value the health benefits at $5 per hour. Assume the benefits cost the firm
$4 per hour to provide.
1.
When firms begin offering health insurance benefits, which of the following is true about the new
demand curve? In this exercise, demand curve is still defined as function of wages (rather than as a
function of total compensation).
The demand curve will shift up by $4
The demand curve will shift down by $4
O The demand curve will shift up by $5
O The demand curve will shift down by $5
Chapter 11 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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