Health insurance as a productive factor

Abstract

In this paper, we present a less-explored channel through which health insurance impacts productivity: by o¤ering health insurance, employers reduce the expected time workers spend out of work in sick days. Using data from the Medical Expenditure Panel Survey (MEPS), we show that a worker with health coverage misses on average 52% fewer workdays than uninsured workers, after controlling for endogeneity. We develop a model that embodies this impact of health coverage in productivity. In our model, health insurance reduces the probability that a healthy worker gets sick, missing workdays, and it increases the probability that a sick worker recovers and returns to work. In our model, …rms that o¤er health insurance are larger and pay higher wages in equilibrium, a pattern observed in the data. We calibrated the model using US data for 2004 and show the impact of increases in health costs, as well as of changes in tax bene…ts of health insurance expenses, on labor force health coverage and productivity. Finally, we show that a government mandate that forces …rms to o¤er health insurance increases average wages and aggregate productivity while reducing aggregate pro…ts, ultimately having a positive impact on welfare.

Health Insurance as an Income Stabilizer

“…The most direct explanation is that health insurance limits negative earning shocks by improving worker health and, in turn, the quantity, quality, and reliability of labor output. The literature strongly supports the hypothesis that better perceptions of one's physical and mental health can translate into increased labor supply (Frijters, Johnston, and Shields, 2014;Bubonya, Cobb-Clark, and Wooden, 2017;Dizioli and Pinheiro, 2016). Perceptions of one's health are likely influenced by insurance status.…”

“…These researchers do not, however, explore the role of health insurance on earnings streams after a health event nor do they use a framework in which insurance is quasirandomized. One possible exception is Dizioli and Pinheiro (2016). Using U.S. Census region of residence as instrument variables for the probability of holding health insurance coverage, these authors find that workers with health insurance missed 76% fewer workdays than comparable workers without health insurance.…”

The Impact of Sickness Absenteeism on Firm Productivity: New Evidence from Belgian Matched Employer–Employee Panel Data

“…Much can be done on this front. For example, firms could consider implementing structured wellness programs and providing higher quality health insurance to their employees in order to enhance their employees' productivity and reduce sickness absenteeism (Dizioli and Pinheiro 2016;Gubler, Larkin, and Pierce 2017).…”

Can Sound Health Insurance Increase the Internal Circulation in the Economy of China?

“…In another instance, researchers such as Fairlie (14) and Bauer and Sinning (15) further, extended this method to the non-linear regression model to demonstrate the impact of health insurance on the economy. Moreover, research conducted by Dizioli and Pinheiro (16) showed that the rural medical insurance system can significantly increase the agricultural labor hours of rural residents and, at the same time, improve the labor supply and supply efficiency of the rural residents (17).…”