Did the Massachusetts Health Reform Program increase self-employment?

Abstract

By providing affordable health insurance untied from employer provision, the Massachusetts Health Reform Program could increase self-employment. Previous studies have estimated both positive and negative effects of the reform on aggregate self-employment using difference-in-differences designs. In this study, I use the synthetic control methodology to confirm the absence of a statistically significant effect of the reform on aggregate self-employment. However, I do detect positive and significant short-run effects of the reform on the probability that individuals become incorporated self-employed. This effect is restricted to individuals 40 years old or younger. I also find that for employees in this age range the reform caused a significant wage reduction. This finding highlights that the higher reform-mandated health insurance coverage was at least in part financed by employees.