Analysis Of Maternity Mandates Passing To Gauge The Reaction Of The Labor Market

This article written by Jonathan Gruber on American Economic Review determines the incidence of mandated maternity benefits. This paper is interdisciplinary of public, labor and health economics. Until 1970s insurers treated maternity with previous conditions and inabilities. Maternity Mandates were enacted by few states and then the federal level ventured in to enact mandates to compel employers to offer thorough childbirth coverage in medical coverage for all women. It was not that the advantages of maternity care were obscure, but insurance agencies could escape with the benefits which should be given to insured. This raises the cost of enlisting childbearing age women. Therefore, this paper exploits the enactment of state and federal maternity mandates to gauge the reaction of the labor market utilizing the information of Current Population Survey (CPS).

Mandates might be more proficient in the light of the fact they are benefit taxes i. e. beneficiaries pay part of the mandate through lower wages or expanded labor supply decreasing the deadweight loss related with them. On the off chance, if the benefits are full and there is no deadweight loss related with the mandates since employers bring down the wages. We may find two plausible impacts of the mandates. First, the wages for this group can be brought down. The beneficiaries pay the full expense of the coverage and there would be no impact on the employment and no deadweight loss if the wages of these women are brought down in same indistinguishable sum as the benefit. Second, there might be lower labor demand for these women if wages are not ready to change. A generous shifting of these expenses to wages for this group might be aftereffect. States laws were passed from the year 1973 to 1979.

These laws were restricting treating pregnant women uniquely in contrast to similar disease in medical coverage benefits. Also, Federal law came into action by disallowing differentiated treatment of pregnancy in the work relationship. Around 2900 ladies of ages 20-40 who were secured through employment based medical coverage via family member or themselves were taken into consideration by using survey of National Medical Care Expenditure. The result showed that 20% of women did not have the inclusion of maternity benefits but had coverage from hospital rooms and other facilities. This paper appraises if shifting of the costs of the mandates affect the wages of target group. If we don’t see the shifting, then either the people who benefits from the mandate does not value or there are obstacles to adjustment. The goal is to learn the impact of laws implemented by experimental states on specific people (treatment group). We have to control any other impacts to the treatment group that might be connected with the law however not because of the law implemented such as national trends (year effects), contrasts in income across states(state effect) or any state specific shock because of the implementation of the laws. This practice compares treated group in the experimental state with control groups in those equivalent states and look at their results (prior and after) with those in non- experimental states which is called differences -in-differences -in-differences estimates (DDD).

The treatment group are all the insured men and women who can be parents and control group are people who won’t affected by the implementation of the law and assumption of no stun influencing the results of treatment group. The treatment group is married women of childbearing age (20 to 40 years)and control group are all people over 40 and single males (single ladies and married guys are dropped). They got the information on medical coverage to evaluate the probability of medical coverage and type of the coverage they would get and allocate to each individual an estimate of the expense of the mandate. For finding the effects of states mandates, spotlight on 3 treated states (New York, New Jersey and Illinois) and 5 control states (North Carolina, Massachusetts, Ohio, Indiana and Connecticut).

We use two years before the implementation of law (1974 and 1975) and two years after the law(1977 and 1978). The result shows wages fell more in treatment groups compared to the control group. Moreover, for the effects on the federal law, treatment group are those which have not sanctioned any state mandates by Jan 1977 and control group are those states that passed state mandates by Jan 1977. DDD finds that there is 5. 4 percent fall in the relative wage of year old married of childbearing age in the experimental states compared to change in real wages in non-experimental states which means the influenced group bears part or the majority of the cost of commands.

Gruber also found that when employers move all the cost to the laborer and there is full valuation, there is no change in number of hours worked or probability of employment. However, managers might need to expand long periods of work and decrease part-time jobs and lessen work for that group. Also, some part-time workers do not have medical coverage, there might be shift towards part time jobs for this group.