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Health insurance and the supply of entrepreneurs: new evidence from the affordable care act

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  • James Bailey

    (Creighton University)

Abstract

Is the difficulty of purchasing health insurance as an individual or small business a major barrier to entrepreneurship in the USA? 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. Using a difference-in-difference strategy, I find that the dependent coverage mandate did not increase self-employment among young adults overall, but increased self-employment among disabled young adults by 19–23%.

Suggested Citation

  • James Bailey, 2017. "Health insurance and the supply of entrepreneurs: new evidence from the affordable care act," Small Business Economics, Springer, vol. 49(3), pages 627-646, October.
    • Handle: RePEc:kap:sbusec:v:49:y:2017:i:3:d:10.1007_s11187-017-9856-8
    DOI: 10.1007/s11187-017-9856-8
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Fone, Zachary S. & Friedson, Andrew I. & Lipton, Brandy & Sabia, Joseph J., 2020. "The Dependent Coverage Mandate Took a Bite Out of Crime," IZA Discussion Papers 12968, Institute of Labor Economics (IZA).
    2. Barış K. Yörük & Linna Xu, 2019. "Impact of the ACA’s Dependent Coverage Mandate on Health Insurance and Labor Market Outcomes Among Young Adults: Evidence from Regression Discontinuity Design," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(1), pages 58-86, January.
    3. Jun Yeong Lee & John V. Winters, 2022. "State Medicaid Expansion and the Self-Employed," Small Business Economics, Springer, vol. 59(3), pages 925-954, October.
    4. Hossain, Md. Mobarak, 2021. "Relationship Between Health Insurance and Self-employment: A Systematic Review," MPRA Paper 105634, University Library of Munich, Germany.
    5. Kwapisz, Agnieszka, 2020. "Health insurance coverage and sources of advice in entrepreneurship: Gender differences," Journal of Business Venturing Insights, Elsevier, vol. 14(C).
    6. Jiayi Bao, 2024. "Gender gap in STEM entrepreneurship: Effects of the Affordable Care Act reform," Strategic Management Journal, Wiley Blackwell, vol. 45(8), pages 1567-1596, August.
    7. Tim Bersak, 2019. "Identification of Job Lock and Inefficient Labor Market Mobility," Southern Economic Journal, John Wiley & Sons, vol. 86(2), pages 530-547, October.
    8. Alyson Ma & Alison Sanchez & Mindy Ma, 2022. "Racial disparities in health care utilization, the affordable care act and racial concordance preference," International Journal of Health Economics and Management, Springer, vol. 22(1), pages 91-110, March.
    9. Nathan Blascak & Vyacheslav Mikhed, 2023. "Health Insurance and Young Adult Financial Distress," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(2), pages 393-423, March.
    10. Bergmans, Rachel S. & Berger, Lawrence M. & Palta, Mari & Robert, Stephanie A. & Ehrenthal, Deborah B. & Malecki, Kristen, 2018. "Participation in the Supplemental Nutrition Assistance Program and maternal depressive symptoms: Moderation by program perception," Social Science & Medicine, Elsevier, vol. 197(C), pages 1-8.
    11. Ghimire Keshar M., 2021. "Supply of immigrant entrepreneurs and native entrepreneurship," IZA Journal of Development and Migration, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-42, January.
    12. Boris Nikolaev & Christopher John Boudreaux & Matthew Wood, 2020. "Entrepreneurship and Subjective Well-Being: The Mediating Role of Psychological Functioning," Entrepreneurship Theory and Practice, , vol. 44(3), pages 557-586, May.
    13. Michael S. Kofoed & Wyatt J. Frasier, 2019. "[Job] Locked and [Un]loaded: The Effect of the Affordable Care Act Dependency Mandate on Reenlistment in the U.S. Army," Upjohn Working Papers 19-300, W.E. Upjohn Institute for Employment Research.
    14. Manuel Hermosilla & Fernanda Gutiérrez-Navratil & Juan Prieto-Rodríguez, 2018. "Can Emerging Markets Tilt Global Product Design? Impacts of Chinese Colorism on Hollywood Castings," Marketing Science, INFORMS, vol. 37(3), pages 356-381, May.
    15. Wang, Zhenggang & Wu, Zenan & Yuan, Ye, 2024. "We’ve got you covered! The effect of public health insurance on rural entrepreneurship in China," Journal of Public Economics, Elsevier, vol. 235(C).
    16. Karolis Matikonis & Matthew Gobey, 2024. "Small Business Property Tax Reductions and Firm Productivity," Small Business Economics, Springer, vol. 62(1), pages 307-324, January.
    17. Fossen, Frank M. & Hossain, Mobarak & Mukhopadhyay, Sankar & Toth, Peter, 2021. "The Cost of Health Insurance and Entry into Entrepreneurship," IZA Discussion Papers 14891, Institute of Labor Economics (IZA).
    18. James Bailey & Dhaval Dave, 2019. "The Effect of the Affordable Care Act on Entrepreneurship among Older Adults," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(1), pages 141-159, January.
    19. Joanna Woronkowicz & Aparna Soni & Seth Freedman & Kosali Simon, 2020. "How have recent health insurance expansions affected coverage among artist occupations in the USA?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 44(1), pages 117-154, March.
    20. Lingyu Gao & Xiaoli Wang, 2019. "Healthcare Supply Chain Network Coordination Through Medical Insurance Strategies with Reference Price Effect," IJERPH, MDPI, vol. 16(18), pages 1-23, September.
    21. James Bailey & Gregory Colman & Dhaval Dave, 2022. "The Evolution of Job Lock in the U.S.: Evidence from the Affordable Care Act," JRFM, MDPI, vol. 15(7), pages 1-13, July.
    22. Margaret E. Blume-Kohout, 2024. "Entrepreneurship Lock and the Demand for Health Insurance: Evidence from the US Affordable Care Act," ILR Review, Cornell University, ILR School, vol. 77(2), pages 199-226, March.

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    More about this item

    Keywords

    Health insurance; Self-employment; Entrepreneurship lock; Affordable Care Act; Dependent coverage mandate;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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