Does health insurance matter for entrepreneurship?

Abstract

We study the effect of improved access to health insurance on entrepreneurial rates across industries. We use the 2006 reform of the Massachusetts health care market as our shock. In contrast to previous research, we use our shock to test which kinds of startups were more likely to be created in addition to whether individuals became more likely to become entrepreneurs. We develop a theoretical model uses institutional heterogeneity to make predictions on how the reform should affect the distribution of entrepreneurs across industries. We see evidence that although non-profit entrepreneurship was significantly affected, overall entrepreneurship is constrained by factors other than access to health care.