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http://ssrn.com/abstract=2230099
 
 

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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 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. 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.

Number of Pages in PDF File: 21

Keywords: Health Insurance, Entrepreneurship, Affordable Care Act, Dependent Coverage Mandate

JEL Classification: L26, J20, I13, I18, M13

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Date posted: March 9, 2013 ; Last revised: July 17, 2014

Suggested Citation

Bailey, James B., Health Insurance and the Supply of Entrepreneurs: New Evidence from the Affordable Care Act's Dependent Coverage Mandate (March 7, 2013). Available at SSRN: http://ssrn.com/abstract=2230099 or http://dx.doi.org/10.2139/ssrn.2230099

Contact Information

James B. Bailey (Contact Author)
Creighton University - Department of Economics ( email )
2500 California Plaza
Omaha, NE 68178
United States
Temple University - Department of Economics ( email )
Philadelphia, PA 19122
United States
HOME PAGE: http://sites.temple.edu/jamesbailey/
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