Health Insurance and the Supply of Entrepreneurs: New Evidence from the Affordable Care Act's Dependent Coverage Mandate
James B. Bailey
Creighton University - Department of Economics; Temple University - Department of Economics
March 7, 2013
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 Act’s dependent coverage mandate, which allowed many 19-25 year-olds to acquire health insurance independently of their employment. A naive difference-in-difference strategy finds that the dependent coverage mandate led to a substantial increase in self-employment among young adults. However, a closer examination of the proper control group together with placebo tests reveals that the naive estimate is not robust, and that the mandate did not truly increase self-employment. This suggests that lack of health insurance and “entrepreneurship lock” have not been major barriers to self-employment for young adults.
Number of Pages in PDF File: 26
Keywords: Health Insurance, Self-Employment, Entrepreneurship Lock, Affordable Care Act, Dependent Coverage Mandate
JEL Classification: L26, J20, I13, I18, M13
Date posted: March 9, 2013 ; Last revised: January 20, 2015
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