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Worker Sorting, Taxes and Health Insurance Coverage
National Bureau of Economic Research [NBER] 
May 3, 2007
Excerpt: We develop a model in which firms hire heterogeneous workers but must offer all workers insurance benefits under similar terms. In equilibrium, some firms offer free health insurance, some require an employee premium payment and some do not offer insurance. Making the employee contribution pre-tax lowers the cost to workers of a given employee premium and encourages more firms to charge.
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