Pursuit of Truthiness

my gut tells me I know economics

Archive for July 2015

Did the Affordable Care Act Reduce Job Lock?

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In a paper just published in Contemporary Economic Policy (ungated here), Anna Chorniy and I find that the answer is no- at least for one piece of the Affordable Care Act. The piece we study is the dependent coverage mandate, which since September 2010 has required family health insurance plans to cover young adults up to their 26th birthday, rather than just their 19th. The ability for young adults to go on their parents health insurance plans gave them a major option for insurance that wasn’t tied to their jobs. I expected this to reduce the “job lock” problem- people staying in a job because switching jobs would mean losing their current employer-based health insurance.

But this effect is just utterly absent from the data. I’ve never seen a result turn out so robustly insignificant in every single way we slice up the data or vary the analysis.

Perhaps the job lock problem is overblown in general, though many papers have found evidence of it; or perhaps 19-25 year olds were simply too young and healthy to really care. Certainly many journal referees thought the result was too obvious to be worth publishing (obvious after reading our paper, at least). Thanks to CEP editor Brad Humphreys for being willing to publish a “negative result”; the fact that so many editors and referees are unwilling to do so is a major source of publication bias and not-so-ethical behavior in response.

Negative results aside, I think we really do have an interesting point to make: that the effect of job lock should differ by age, going from non-existent for young adults to substantial for older adults. This is indeed obvious once we point it out. But it was ignored by a large previous literature on job lock, which has tended to lump all working-age adults together and pronounce what “the” job lock effect is (or to focus on a single age group without pointing out how their age makes them unusual). Always be on the lookout for how people respond differently to the same thing.

Written by James Bailey

July 18, 2015 at 4:44 pm