title: Who pays for public employee health costs?
abstract: We analyze the incidence of public-employee health benefits. Because these benefits are negotiated through the political process, relevant labor market institutions deviate significantly from the competitive, private-sector benchmark. Empirically, we find that roughly 15 percent of the cost of recent benefit growth was passed onto school district employees through reductions in wages and salaries. Strong teachers' unions were associated with relatively strong linkages between benefit growth and growth in total compensation. Our analysis is consistent with the view that the costs of public workers' benefits are difficult to monitor, contributing to benefit oriented, and often under-funded, compensation schemes.
authors.affiliation: University of California, San Diego and NBER, United States. Electronic address: clemens.jeffrey@gmail.com.
authors.forename: Jeffrey
authors.initials: J
authors.lastname: Clemens
authors.affiliation: Harvard University and NBER, United States.
authors.forename: David M
authors.initials: DM
authors.lastname: Cutler
mesh_terms: D000465:Algorithms; D006264:Health Benefit Plans, Employee; D005102:Health Expenditures; D006801:Humans; D007349:Insurance, Health, Reimbursement; D017150:Public Sector
keywords: Benefit incidence; Fiscal federalism; Health insurance; Public sector unions; State and local government finances