Health Insurance, Labor Supply, and Job Mobility: A Critical Review of the Literature

59 Pages Posted: 28 Feb 2002 Last revised: 6 Aug 2022

See all articles by Jonathan Gruber

Jonathan Gruber

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Brigitte C. Madrian

Brigham Young University Marriott School of Business; National Bureau of Economic Research (NBER)

Date Written: February 2002

Abstract

This paper provides a critical review of the empirical literature on the relationship between health insurance, labor supply, and job mobility. We review over 50 papers on this topic, almost exclusively written in the last 10 years. We reach five conclusions. First, there is clear and unambiguous evidence that health insurance is a central determinant of retirement decisions. Second, there is fairly clear evidence that health insurance is not a major determinant of the labor supply and welfare exit decisions of low income mothers. Third, there is fairly compelling evidence that health insurance is an important factor in the labor supply decisions of secondary earners. Fourth, while there is some division in the literature, the most convincing evidence suggests that health insurance plays an important role in job mobility decisions. Finally, there is virtually no evidence in the literature on the welfare implications of these results. We present some rudimentary calculations which suggest that the welfare costs of job lock are likely to be modest. Our general conclusion is that health insurance has important effects on both labor force participation and job choice, but that it is not clear whether or not these effects results in large losses of either welfare or efficiency.

Suggested Citation

Gruber, Jonathan and Madrian, Brigitte C., Health Insurance, Labor Supply, and Job Mobility: A Critical Review of the Literature (February 2002). NBER Working Paper No. w8817, Available at SSRN: https://ssrn.com/abstract=302578

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Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Brigitte C. Madrian

Brigham Young University Marriott School of Business ( email )

Provo, UT 84602
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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