Does the Marginal Entrepreneur Matter?
34 Pages Posted: 12 Oct 2015 Last revised: 30 Jan 2020
Date Written: January 14, 2020
I study the effect of improved access to health insurance on the rate new business formation and the quality of those newly created businesses. I develop theoretical models which provide predictions on how improved access to health insurance would heterogeneously affect firms by non-profit status and capital requirements. Using the 2006 reform of the Massachusetts health insurance market, I test those predications and find non-profit entrepreneurship was significantly affected although overall entrepreneurship seems constrained by factors other than access to health care such as access to capital. I also provide evidence that the quality of non-profits created by the shock where poor. These results suggest that even when policy changes are able to induce more entrepreneurship, the marginal quality of those entrepreneurs may be poor.
Keywords: Entrepreneurship; Firm Entry; Non-Profit; Job Lock; Liquidity Constraints; Health Insurance
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