Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/250552 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14891
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Unavailable or expensive health insurance may hinder the transition of individuals from paid employment to entrepreneurship. The literature argues that the guaranteed availability of health insurance introduced by the Affordable Care Act (ACA) of 2010 could reduce this barrier to entrepreneurship and thereby increase entrepreneurial activity. In this paper, we investigate how much the cost of health insurance when leaving paid employment—given availability of health insurance—matters for the decision to become an entrepreneur. We use individual-level data from the Current Population Survey (CPS-ASEC) combined with county-level panel data on health insurance costs in local Health Insurance Exchanges (HIX) introduced by the ACA to estimate county-treatment fixed-effects regressions. The results indicate that increasing the premium of the benchmark HIX plan by $100 per month decreases the annual probability of entry into self-employment by 0.25 percentage points, which corresponds to 18% of the average annual entry rate.
Subjects: 
entrepreneurship
health insurance
premium
deductible
MOOP
JEL: 
I13
I11
J22
J23
L26
Document Type: 
Working Paper

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