EMPLOYER-PROVIDED HEALTH INSURANCE INHIBITS JOB MOBILITY
September 13, 2004
Economist Scott Adams says that because employers are the primary providers of health insurance in the United States, some people who would prefer to leave their current jobs may remain to avoid losing health benefits.
Some legislation has been put in place to reduce this phenomenon, called "job-lock." Adams suggests job-lock is inefficient because it impedes the optimal allocation of labor, so it's important not only to identify whether it exists but also to quantify its impact. In his research, Adams finds that:
- Among men aged 25 to 55 with spouses, there is an approximate 22 percent to 32 percent reduction in job mobility stemming from health insurance coverage.
- Slightly more job lock is found among married women.
- It is estimated that job lock has increased since 1988.
Overall, Adams results are consistent with earlier studies that found job mobility was reduced by 26 percent to 31 percent due to the lack of portability of employer-provided health coverage.
Source: Scott J. Adams, "Employer-Provided Health Insurance and Job Change," Contemporary Economic Policy, July 2004.
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