ERIC Number: ED317700
Record Type: RIE
Publication Date: 1989-Sep
Effects of Mandating Benefits Packages. Background Paper No. 32.
Mitchell, Olivia S.
This study of the potential labor market consequences of government mandating of employee benefits suggests that mandating benefits will increase benefit coverage and generosity for insurance coverage will not be helped; even when mandating benefits does improve benefit provision, there will be other offsetting effects, including wage and other benefit cuts, reduced work hours, reduced employment, and possible output reductions; and employer bias against workers who are particularly expensive to insure may also result. A variable cost format where benefits accrue according to hours worked somewhat mitigates the drawback of raising labor costs for low-wage workers and is more responsive to worker and firm differences in the demand for benefits. Any tax incentives should be paired with a cap on the overall fraction of payroll that can be used for tax-shielded employee benefit contributions in order to make the tax and benefit systems more equitable as a whole. If benefits are to be mandated, each element of a target mandated benefit package should be ranked in a priority list and justified on both efficiency and equity grounds. A separate approach should be designed to meet the needs of those not covered by employer-provided benefit programs. (73 references) (CML)
Publication Type: Information Analyses
Education Level: N/A
Sponsor: Department of Labor, Washington, DC. Commission on Workforce Quality and Labor Market Efficiency.
Authoring Institution: N/A
Note: In "Investing in People: A Strategy to Address America's Workforce Crisis" (CE 054 080).