Entrepreneurship Rates and Health Insurance Dependent Coverage Mandates

Abstract

Does the availability of health insurance for young adults affect entrepreneurial behavior? Prior research has proposed that the employer- provided system of insurance in the US may reduce entrepreneurship, as individuals are locked into an employer-employee relationship to maintain coverage. This paper proposes that policy effects may go beyond the binary, and shape choices around entrepreneurial form, such as the decision around incorporation. I use the adoption of 38 dependent coverage mandates in 31 states, passed from 1986 to 2013, and the adoption of a federal mandate in 2010 to analyze the impact of non-employer provided insurance on entrepreneurial activities. I find a positive relationship between the 2010 federal mandate and unincorporated entrepreneurship, and negative relationships between state and federal mandates and incorporated entrepreneurship. These results suggest that while a reduction in job lock through non-employer insurance for young adults may encourage unincorporated entrepreneu...