If labor markets determine equilibrium compensation,a reduction in employer contributions for health insurance should

Question

Quizplus · Accepted Answer

According to the theory of labor markets, a reduction in employer contributions for health insurance should lead to an offsetting increase in wages because the total compensation package for workers remains the same. As a result, employers will need to increase wages to maintain the same level of compensation. Therefore, the answer is A.

If Labor Markets Determine Equilibrium Compensation,a Reduction in Employer Contributions