Does Health Insurance Matter for Entrepreneurship?
31 Pages Posted: 12 Oct 2015 Last revised: 17 Feb 2016
Date Written: January 21, 2016
I study the effect of improved access to health insurance on entrepreneurship and measure the quality of those newly created firms. I use the 2006 reform of the Massachusetts health care market as my shock. In contrast to previous research, I use my shock to test which kinds of startups were more likely to be created in addition to whether individuals became more likely to become entrepreneurs. I develop a theoretical model uses institutional heterogeneity to make predictions on how the reform should affect the distribution of entrepreneurs across industries. I see evidence that although non-profit entrepreneurship was significantly affected, overall entrepreneurship is constrained by factors other than access to health care. I also provide evidence that the quality of non-profits created by the shock may be low, suggesting that even if access health insurance matters for entrepreneurship, it may not matter for the kind of entrepreneurship that most benefits society.
Keywords: Employer-provided health insurance, Entrepreneurship, Self-employment, Job Lock, Health Care
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