Employer-provided health insurance and equilibrium wages with two-sided heterogeneity.

Summary This paper develops an equilibrium search model that allows rms to invest in worker's health. Heterogeneous health endowment of the employee is not observed by the employer, and rms also dier regarding their productivities. We emphasize that wage and health expenditure policies of the employer are tightly related, and show how those policies relate to rms' type. A noticeable implication is that there is an ambiguous relationship between wage earnings and health expenditures supported by firms.