This paper estimates the trade-off between salary and health insurance costs using data on Illinois school teachers between 1991 and 2008 that allow us to address several common empirical challenges in this literature. We find no evidence that changes in teachers’ salaries respond to changes in insurance cost, but teachers paid about 17 percent of the cost of individual health insurance and about 46 percent of the cost of their family members’ plans through increased premium copayments. Our results indicate that premium increases were not associated with commensurate increases in teachers’ valuation of their health insurance plans
