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The Effect of the Affordable Care Act on Entrepreneurship among Older Adults

James Bailey () and Dhaval Dave
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Dhaval Dave: Bentley University

Eastern Economic Journal, 2019, vol. 45, issue 1, 141-159

Abstract: Abstract One goal of the Affordable Care Act (ACA) was to enable entrepreneurship by increasing access to non-employer-based health insurance. We evaluate the extent to which the ACA was successful at this, providing some of the first estimates of the effect of the main provisions of the ACA on entrepreneurship. We are the first to focus specifically on older adults, whose higher average health costs and health insurance premiums make health insurance more salient to their labor market decisions. We do so using data from the American Community Survey and a difference-in-difference strategy, taking advantage of Medicare-eligibles as a control group less affected by the ACA. We find that the ACA led to a 3–4% increase in self-employment. We find similar increases in the likelihood of being self-employed in an incorporated business and of generating at least $5000 in business income, as well as a 9% increase in the likelihood of being self-employed full time. By lowering the cost of non-employer health insurance policies to older adults, the ACA appears to have eased their transition from employment to self-employment.

Keywords: Health insurance; Affordable Care Act; Job-lock; Self-employment; Entrepreneurship; Labor supply; Public insurance (search for similar items in EconPapers)
JEL-codes: I1 J2 (search for similar items in EconPapers)
Date: 2019
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