Taxes, Health Insurance and Women's Self-Employment

35 Pages Posted: 10 Jun 2008 Last revised: 7 Oct 2010

Date Written: May 1, 2008


I examine whether the availability of health coverage through the spouse's health plan influences a married woman's decision to become self-employed. The Tax Reform Act of 1986 (TRA86) introduced a tax subsidy for the self-employed to purchase their own health insurance. I test whether this 'natural' experiment induced more women without spousal health insurance coverage to select into self-employment. The difference-in-difference estimates based on an analysis of employed women indicate that the incidence of self-employment among women who did not enjoy spousal health benefits rose significantly - between 14% and 25% - in the post-TRA86 period, while a multinomial specification based on a sample of both employed and non-employed women suggests that the increase was around 9%.

Keywords: Health Insurance, Self-Employment

JEL Classification: J0,J3,I1

Suggested Citation

Velamuri, Malathi, Taxes, Health Insurance and Women's Self-Employment (May 1, 2008). Available at SSRN: or

Malathi Velamuri (Contact Author)

Chennai Mathematical Institute ( email )

Chennai, TN Chennai

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