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1. Introduction
Health insurance availability is a significant factor in labor market decisions (Aggarwal et al., 2013; DeCicca, 2010; Fairlie et al., 2011; Madrian, 1994). Employer-based insurance can offer desirable characteristics for workers: subsidized group insurance and negotiated lower premiums based on group risk assessment. If an individual decides to leave his or her job to engage in self-employment, obtaining affordable, quality coverage through the individual market is a large concern. The Patient Protection and Affordable Care Act (ACA) aims to increase insurance access for all ages. While certain provisions of the ACA have been phased in over several years, one group was affected early in the process: dependents under the age of 26. These individuals can now remain on their parent’s insurance (henceforth known as the Dependent Mandate (DM)[1]). Further, it is noteworthy that many states adopted a DM prior to the implementation of the ACA (Goda et al., 2016). We focus our analysis on the effect of the ACA 2010 DM on entrepreneurship among young adults, while using variation in prior state-level DMs for identification.
There is concern among policy makers and economists that young adults seeking jobs will focus solely on employers that provide health insurance. Young adults that may have otherwise chosen an entrepreneurial path would be forced into job lock; hence, discouraged from pursuing self-employment due to a lack of access to affordable health insurance. Current estimates indicate that the DM affects 29.5 million young adults (Antwi et al., 2013); thus, a change in the labor decisions of this age group could substantially influence the labor market and the overall economy.
While studies assessing the effects of individual insurance options on self-employment have been conducted, many have concentrated on factors influencing the entire labor force. Studies on specific age groups are smaller in number and narrow in focus (e.g. the effects in a single state, Massachusetts). In this paper, we add to the research regarding health insurance and job lock, by specifically assessing the effects of the DM. Using data from the American Community Survey (ACS), we assess whether the mandate has affected self-employment among individuals aged 18-25.
We use regression models to estimate self-employment as a function of the DM and other demographic, geographic, and...