Question

Economic theory suggests that mandated benefits decrease equilibrium wages, particularly for employees who benefit for the mandated benefit the most. Describe Gruber’s empirical study, discussed in class, that supports this theoretical prediction.

Answer 1

Solution:

Gruber indeed got to study about the impact of mandated health insurance benefits for the people in the U.S. and he late got to find that there is indeed a substantial shifting of the costs to the wages of the targeted group that can get to effect on the equilibrium wages a lot where it can reduce the equilibrium wages on the whole.

using theoretical and empirical evidence. First, we describe economic models of why employers offer insurance. Second, we recap the relevant provisions of health reform and use our economic framework to consider how they may affect employer offers. Third, we review the various predictions that have been made on this subject. Finally, we offer some observations on interpreting early data.