Health Insurance and Labor Supply: a Dynamic Analysis of Job Mobility

This paper attempts to provide additional evidence that married males who hold employerprovided health insurance (EPHI) are not locked into their jobs. Most of the previous literature on job-lock nds reductions in the mobility of these workers of between 20 and 40%. We introduce two new strategies for generating unbiased estimates of job-lock. First, a feature unique to the National Longitudinal Survey of Youth in relation to the data sources used in previous papers is the availability of information on whether EPHI is o ered by the respondent's current employer, as well as whether such insurance is held by a respondent. The o er of insurance should not hinder mobility; job-lock becomes an issue only if insurance is accepted. We also include other variables that capture the reduced-mobility e ects of \good jobs" characteristics. Secondly, in order to avoid bias associated with the correlation between insurance and individual speci c turnover propensity, we make use of the longitudinal NLSY data and a discrete factor random e ects procedure to model the permanent unobserved heterogeneity of individuals. Our results provide an estimate of job-lock unbiased through correlation with individual speci c turnover propensity. We nd no evidence of job-lock among married males, but produce estimates of job-lock among unmarried males of