Job lock occurs when labor market mobility decisions are affected by the presence or absence of health insurance as a fringe benefit. Because of chronic health problems in their families, some workers may be forced to stay with a job that provides health insurance rather than move to another and risk losing health insurance. Other workers with chronic health problems in their families may be unable to move into jobs that provide health insurance. These two types of job lock we call lockin and lockout. If job lock is prevalent, then the overall quality of matches between workers and employers is reduced and workers are on average less productive. The objectives of this project are to investigate whether the two types of job lock exist, determine their prevalence, and estimate their costs in terms of reduced compensation of workers. To investigate job lock we will use the 1987 and 1990 panels of the Survey of Income and Program Participation (SIPP). SIPP is well-suited for this project because it contains information on health insurance, health status, compensation, and personal characteristics for a large nationwide sample of individuals and their families. We will use the SIPP to estimate hazard models of job tenure that will depend on the health insurance status and health status of family members of the worker. Differences in hazard rates for workers with and without employer-provided health insurance and with and without family members having health problems will allow us to identify the effects of job lockin. Among those currently without employer-provided health insurance, differences in hazard rates for workers who have and do not have a family member in poor health will identify job lockout effects. We will identify the effects of job lock on compensation in a similar fashion by estimating wage and fringe benefit equations that include health insurance and health status variables.
