“Three in 10 Americans say they or someone in their household have at some time stayed in a job they wanted to leave mainly to keep the health benefits, according to a New York Times/CBS News Poll. The survey provides some of the strongest evidence yet of pervasive concern about the costs of medical insurance and care.”
“We will strengthen health savings accounts — making sure individuals and small business employees can buy insurance with the same advantages that people working for big businesses now get. We will do more to make this coverage portable, so workers can switch jobs without having to worry about losing their health insurance.”
– President George W. Bush,
– State of the Union Address, 2006
Health insurance is a major issue in the United States. Nearly
everyday, residents can pick up a newspaper and read a story
expounding on the worsening `health care crisis.’ Many workers
fear losing their job, not simply due to the loss in wages, but
even more due to the loss in health insurance coverage. In fact
many workers decide to stay at a job whose compensation is less
than their marginal product because they fear the loss of their
health insurance. This phenomenon is known as `job lock.’ The
term has received much publicity both in the economics literature
and in the popular press. The economics literature seeks to
answer the following three questions:
- Does job lock exists?
- If job lock does exist, what is its impact on social welfare?
- Does current regulation aimed at combatting job lock improve social welfare?
In the following literature review, I will show how the field of
Economics has attempted to answer these questions.