February 26, 2009

February 26, 2009 | White Paper on Health Care

Does Employer-Sponsored Health Insurance Reduce Job Mobility?

How the health insurance system influences the likelihood of changing jobs and becoming self-employed

Abstract

This paper investigates the extent to which employer-sponsored health insurance influenced job mobility between 1995 and 2007. This time period is important given the recent increase in the cost of private health insurance and the enactment of the Health Insurance Portability and Accountability Act in 1996. In addition, changes in the tax treatment of health insurance for the self-employed occurred throughout the period. Using data from the 1996-2007 March Supplements of the Current Population Survey, I find that for married women with employer-sponsored insurance, having an alternative source of coverage increases their likelihood of becoming self-employed by 75 percent, while the number of children they have reduces their likelihood of switching jobs by 7 percent. Overall, I find that having an alternative source of insurance increases the likelihood of switching jobs by 9 percent. Finally, I do not find evidence to suggest that job-lock affects married men. (JEL J20, J38, J60)

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About the Author

Paul Winfree Director, Thomas A Roe Institute for Economic Policy Studies
Thomas A. Roe Institute for Economic Policy Studies