Gender differences in the valuation of employer-provided health insurance

We present evidence that accurate estimates of the labor-earning/employer-provided health insurance trade-off must account for two different effects: the heterogeneity of jobs and the endogeneity of health insurance. The size of the trade-off depends on employees' contribution to premiums, health-care needs, and valuation of insurance. We use Medical Expenditure Panel Survey data and instrumental variables/two-stage least squares. On average, workers accept about 16.5% to 20% lower earnings in return for insurance, and married women value insurance by about 3.5 percentage points more than married men, explaining about 3% of the gender-earning differentials. Health insurance does not contribute to the unexplained portion of the gender-pay gap. Reprinted by permission of Wiley-Blackwell