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Health Insurance and the Supply of Entrepreneurs: New Evidence from the Affordable Care Act's Dependent Coverage Mandate

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  • James Benjamin Bailey

Abstract

Is the difficulty of purchasing health insurance as an individual or small business a major barrier to entrepreneurship in the United States? I answer this question by taking advantage of the natural experiment provided by the Affordable Care Actâs dependent coverage mandate, which allowed many 19-25 year olds to acquire health insurance independently of their employment. This mandate provides a means to estimate the number of potential entrepreneurs discouraged by the current system of employer-based health insurance. A difference-in-difference strategy finds that the dependent coverage mandate led to a 13-24% increase in self-employment among the treated group. The effect is found to be larger for women and for unincorporated businesses. An instrumental variables strategy finds that those actually receiving health insurance coverage as dependents were much more likely to start businesses.

Suggested Citation

  • James Benjamin Bailey, 2013. "Health Insurance and the Supply of Entrepreneurs: New Evidence from the Affordable Care Act's Dependent Coverage Mandate," 2013 Papers pba1129, Job Market Papers.
    • Handle: RePEc:jmp:jm2013:pba1129
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    Cited by:

    1. Liu, Lulu & Zhang, Yuting, 2018. "Does non-employment based health insurance promote entrepreneurship? Evidence from a policy experiment in China," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 270-283.
    2. Bradley Heim & Ithai Lurie & Kosali Simon, 2015. "The Impact of the Affordable Care Act Young Adult Provision on Labor Market Outcomes: Evidence from Tax Data," Tax Policy and the Economy, University of Chicago Press, vol. 29(1), pages 133-157.
    3. Gregory Colman & Dhaval Dave, 2018. "It'S About Time: Effects Of The Affordable Care Act Dependent Coverage Mandate On Time Use," Contemporary Economic Policy, Western Economic Association International, vol. 36(1), pages 44-58, January.
    4. Bradley T. Heim & Lang Kate Yang, 2017. "The impact of the Affordable Care Act on self‐employment," Health Economics, John Wiley & Sons, Ltd., vol. 26(12), pages 256-273, December.
    5. Nga Le Thi Quynh & Groot, Wim & Tomini, Sonila M. & Tomini, Florian, 2017. "Effects of health insurance on labour supply: A systematic review," MERIT Working Papers 2017-017, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Serakos Maria & Wolfe Barbara, 2016. "The ACA: Impacts on Health, Access, and Employment," Forum for Health Economics & Policy, De Gruyter, vol. 19(2), pages 201-259, December.

    More about this item

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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