Public Policy Brief No. 10 | November 1993

Job-lock: An Impediment to Labor Mobility?

Is Health Insurance Crippling the Labor Market?

Recent survey results and anecdotal evidence appear to indicate that workers sometimes sacrifice job opportunities by remaining in their current position in order to retain health benefits. If “job-lock” is real, the nation pays an economic price in terms of a misallocation of workersamong productive opportunities, higher relocation and training costs for workers who have stayed too long in their jobs, and the loss of innovation, employment, and competition associated with start-up ventures. Douglas Holtz-Eakin suggests that the incidence of job-lock may be overstated. Therefore, reform programs proposing to dismantle the current system of employer-provided insurance in order to improve labor mobility are misguided. Rather, policy should aim to improve access to health care, improve the efficiency of insurance operations, and guarantee the portability of insurance coverage and premium expenses.

Associated Program:
Douglas Holtz-Eakin

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