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Estimating the Relationship between Employer-Provided Health Insurance, Worker Mobility, and Wages

  • Martha Stinson
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    In this paper, a joint model of wages, hazard of a job ending, and probability of holding employer-provided health insurance is estimated, taking account of unobservable person and job characteristics. A unique data source, the 1990 and 1996 SIPP Panels linked to SSA administrative job histories, enables the identification of random person and job effects and the correlation of these effects across the three equations. The explicit modeling of this correlation produces consistent estimates of the effect of tenure on wages and the effect of health insurance on mobility. Substantial levels of job-lock and significant annual returns to seniority are found. Increasing the job-specific probability of obtaining employerprovided health insurance from 60% to 63%, or increasing the job-specific hourly wage rate by $.80, are both associated with an equivalent decrease in the hazard of the job ending. However, the dollar value of the wage benefit is substantially higher.

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    File URL: ftp://ftp2.census.gov/ces/tp/tp-2002-23.pdf
    File Function: Revised version, 2003
    Download Restriction: no

    Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Longitudinal Employer-Household Dynamics Technical Papers with number 2002-23.

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    Length: 44 pages
    Date of creation: Sep 2002
    Date of revision: Jun 2003
    Handle: RePEc:cen:tpaper:2002-23
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    1. Thomas C. Buchmueller & Robert G. Valletta, 1996. "The Effects of Employer-Provided Health Insurance on Worker Mobility," ILR Review, Cornell University, ILR School, vol. 49(3), pages 439-455, April.
    2. Donna B. Gilleskie & Byron F. Lutz, 2002. "The Impact of Employer-Provided Health Insurance on Dynamic Employment Transitions," Journal of Human Resources, University of Wisconsin Press, vol. 37(1), pages 129-162.
    3. Kanika Kapur, 1998. "The Impact of health on job mobility: A measure of job lock," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 51(2), pages 282-298, January.
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