Unbiased Analysis of Today's Healthcare Issues

Job Lock: A Literature Review

Written By: Jason Shafrin - Mar• 16•06

I have recently completed a paper titled Job Lock: A Literature Review, which has been posted in the ‘Papers by HC Economist‘ page. Here is a brief excerpt from the beginning of the paper.

“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

INTRODUCTION

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:

  1. Does job lock exists?
  2. If job lock does exist, what is its impact on social welfare?
  3. 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.

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6 Comments

  1. […] sub-optimal jobs to maintain their health insurance is known as “job lock.”  I wrote a brief literature review about job lock 3 years […]

  2. […] this blog, I have frequently discussed the concept of Job Lock.  Job Lock occurs when you don’t leave a job that you wish to leave (either because it is […]

  3. […] second jobs (e.g., Starbucks) just to have some insurance coverage. These two problems are named Job Lock and Job Stretch. If workers can choose employers based on wages, their own skills, and the overall […]

  4. […] your job, or change your job, you’ll lose your health insurance too. [This is the problem of job lock and job […]

  5. […] this about a “sharp reductions in labor supply”?  What about the Mr. Nixon’s of the world?  His story is far from unique. I would invite Professor Kessler to spend some time in my chair and lecture the next Mr. Nixon who […]

  6. […] Shafrin, the Healthcare Economist, has on a couple of occasions discussed the issue of job lock on his blog.  Job lock is the idea that workers with employer sponsored health insurance will not leave their […]