The impact of the Affordable Care Act on self-employment

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This paper estimates the impact of the implementation of the Affordable Care Act (ACA) in 2014 on the decision to be self-employed. Using data from the Current Population Survey, we employ two identification strategies. Utilizing prereform variation in state nongroup health insurance market regulations, we find that the ACA did not increase self-employment overall in states that lacked similar provisions in their nongroup markets prior to 2014. In specifications that utilize variation across individuals in characteristics that could make it harder for them to purchase insurance if they left their current employer, we also do not find that the ACA differentially increased self-employment. However, in states that lacked the ACA nongroup market provisions, we do find a statistically significant increase in the second year of implementation (when individuals had more time to adjust behavior and the exchanges functioned properly) among individuals eligible for insurance subsidies, suggesting that a combination of time to adjust, low uncertainty and low insurance costs may be necessary for nongroup health insurance reforms to impact self-employment.

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