Continuous job lock: employer health insurance contributions and job tenure

ABSTRACT

We estimate the effect of employers providing health insurance and contributing towards health insurance premiums on employee job tenure. Using merged 2008–2018 data from the Job Tenure Supplement and Annual and Social Economic Supplement of the Current Population Survey, we find that employer health insurance is associated with one additional year of job tenure. We find that a thousand dollar increase in employer contributions to health insurance is associated with at least 83 additional days of job tenure, compared to less than 10 additional days for a thousand dollar increase in wages.

KEYWORDS:

• Job lock
• job tenure
• health insurance premiums
• employer contributions

JEL CLASSIFICATION:

• I10
• J22
• J32

Acknowledgments

Thanks to Anna Chorniy for helpful comments.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

The data that support the findings of this study are openly available in the Open Science Foundation repository at http://doi.org/10.17605/OSF.IO/AH2U5

Notes

¹ Employer plans effectively provide guaranteed-issue plans for individuals healthy enough to work, along with limited community rating; pre-ACA this may have been a major component of job lock. However, since 2014 guaranteed issue and community rating have been required for all private plans, including non-employer plans. We therefore expect that, post-2014, employer contributions and plan switching costs are the main mechanisms driving job lock.

² Of the remaining 54%, some may have insurance from a family member’s employer.

³ Note that the true value may be substantially higher, because the CPS top-coding reports all contributions greater than $9997 as $9997.