The Many Faces of Mandates: Beyond Traditional Accommodation Mandates and Other Classic Cases

The paper compares the two main social policy tools used by society to enhance the welfare of its workers: mandated benefits and tax financed programs. It shows that mandated benefits could involve economic inefficiency (excess burden) identical to that of taxes; and that they often have perverse redistribution effects. According to the literature that followed Lawrence Summers' seminal paper on mandated benefits, mandates are assumed to produce less distortion than tax financed programs. In this paper I stress the fact that a critical assumption behind this idea is that tax-financed programs have a particular design, namely, that participation in them is not limited to employees. The Article goes beyond what is considered to be the classic case in terms of the distortions discussion (mandated health insurance vs. tax financed government provided health care) to situations in which exclusion of non-employees seems plausible and sensible. This Article also goes beyond "traditional" accommodation mandates by looking at several thought provoking cases such as overtime and pension vesting (which turn out to be just like accommodation mandates, but with distributive effects running in the opposite direction potentially). Interestingly, a number of real-world mandates disproportionately target or benefit a particular group (e.g., men) that is a discrete demographic group that could be identified in advance. Nevertheless this type of accommodation mandates differs from those discussed by Christine Jolls's seminal work on Accommodation Mandates in that they are unintended by the policymaker and might redistribute wealth in the opposite direction of what society usually views as desirable. Unlike the mandates that Jolls discussed that could hurt their intended beneficiaries, if restrictions on wage and employment differentials were not binding, these mandates are ones in which, precisely if restrictions on wage and employment differentials bind, groups to whom we would normally want to redistribute (women, lower compensated employees) will be made worse off.