The tradeoff between knowledge of mandated benefits and moral hazard.
When workers are not aware of a mandated benefit, they cannot take it into account in their employment decision, leading to deadweight loss. On the other hand, lack of awareness of a benefit reduces moral hazard, decreasing deadweight loss. I incorporate these trade‐offs into a model of mandated ben...
| Published in: | Southern Economic Journal Vol. 88; no. 3; pp. 1037 - 1065 |
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| Format: | Article |
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Wiley-Blackwell
Jan2022
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| Online Access: | View this record in EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=154498450&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 154498450 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 00384038 SEJ jtl: Southern Economic Journal issn: 00384038 maglogo: N pubinfo: dt: Jan2022 vid: 88 iid: 3 pid: 480 pub: Wiley-Blackwell artinfo: ui: 154498450 10.1002/soej.12552 ppf: 1037 ppct: 28 formats: fmt: – @attributes: type: T – @attributes: type: C – @attributes: type: P size: 3.8MB tig: atl: The tradeoff between knowledge of mandated benefits and moral hazard. aug: su: Employee benefits Moral hazard Public service advertising Disability insurance sug: subj: Employee benefits Other Insurance Funds Health and Welfare Funds Direct individual life, health and medical insurance carriers Direct group life, health and medical insurance carriers Direct Life Insurance Carriers Moral hazard Public service advertising Disability insurance keyword: disability insurance imperfect information mandated benefits disability insurance imperfect information mandated benefits ab: When workers are not aware of a mandated benefit, they cannot take it into account in their employment decision, leading to deadweight loss. On the other hand, lack of awareness of a benefit reduces moral hazard, decreasing deadweight loss. I incorporate these trade‐offs into a model of mandated benefits and apply the model to Temporary Disability Insurance, an employment benefit mandated in five states. First, using data collected through an original survey, I provide evidence that there is low awareness of this benefit. Second, I use the updated mandated benefits model to show that over a broad range of reasonable assumptions, the additional employee valuation of the benefit outweighs the additional program cost from moral hazard, and thus a public information campaign would increase employment. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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