The State Health Insurance Program and Job Mobility: Identifying Job Lock among Working Parents in Near-Poor Households

We use the introduction of the State Children’s Health Insurance Program (SCHIP) to assess whether the job mobility and wages of near-poor parents are suppressed through job lock. We exploit differential take up rates among eligible households and stratify adults in these household in to quasi-experimental treatment and control groups. Using data from the 1996 and 2001 Survey of Income and Program Participation (SIPP), we first identify working adults whose children meet the SCHIP eligibility criteria. We then separate these workers into two groups: those with employed spouses who have employer provided coverage in their own names and those who do not. For the former group, the introduction of SCHIP is unlikely to relieve job lock since they already had a viable alternative source of coverage. For the latter group, however, SCHIP provides an alternative source of coverage where one previously did not exist. We find a large significant increase in public coverage rates among the children of adults who do not have independently insured spouses (on the order of 10 percentage points). There is no such increase among adults with insured spouses. Corresponding to these differential take up rates are differences in the change in job mobility. Among workers without insured spouses, we observe a 6 percent point increase in the likelihood that the worker separates from their current employer within one year after SCHIP is implemented. We see no comparable change in mobility among those with insured spouses. This relative pattern survives regression adjustment for observable demographic characteristics, the household’s position in the income distribution and a host of other controls. Finally, we find no effect of the increased mobility on relative wages.