Health Insurance and the Supply of Entrepreneurs: New Evidence from the A ordable Care Act's Dependent Coverage Mandate JOB MARKET PAPER

Is di culty 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 A ordable 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 di erence-in-di erence strategy nds that the dependent coverage mandate led to a 13-24% increase in self-employment among the treated group. The e ect is found to be larger for women and for unincorporated businesses. An instrumental variables strategy nds that those actually receiving health insurance coverage as dependents were much more likely to start businesses.