Health and Coverage At Risk

Abstract

Given the similarity of the two countries and their interconnections, one would expect Canadian employers to act much like their American counterparts, especially since firms from both countries often compete in the same markets using similar technologies (Verma and Thompson 1988). The similarities in the two countries and their integration through trade make it likely that the policy experiences of one have relevance for the other (Gunderson, Hyatt, and Pesando 1996). This chapter provides an introduction to some of the conceptual issues concerning compensation risk bearing by workers in labor markets. The following discussion provides background and is more abstract than the other chapters, which discuss the evidence concerning changes in risk bearing in particular aspects of compensation. This chapter provides a framework for thinking about some of the issues raised in the more applied chapters, and it concludes with an overview of the remainder of the book. COMPENSATION RISK BEARING IN LABOR MARKETS Conceptual Issues Risk is an element of all aspects of employee-employer relationships, including pay rates, working time, and employment security. The allocation of risk bearing determines the extent to which risks are borne by workers, by firms and their stockholders, and by government. Labor market risks may pose serious problems for some workers. Many workers have mortgages and large financial commitments for rearing and educating children. Fixed financial commitments become problems for workers who face decreases in income due to unemployment or decreased work hours, or increases in expenses due to medical bills not covered by health insurance. Employers face risks affecting their demand for labor due to changes in their factor markets, technology, exchange rates, international competition, domestic competition, the legal environment, tax policy, and macroeconomic conditions affecting demand for their product. Other demand-side factors that may affect workers' risk include