Abstract
While a large share of Disability Insurance recipients in OECD countries are expected to recover, outflow rates from temporary disability schemes are typically negligible. We estimate the disincentive effects of disability benefits on the response to a (mental) health improvement using administrative data on all Dutch disability benefit applicants. We compare those below the DI eligibility threshold with those above and find that disincentives significantly reduce work resumption after health improves. Approximately half of the response to recovery is offset by benefits. Estimates from a structural labor supply model suggest that disincentives are substantially larger when the worker's earnings capacity is fully restored.
| Original language | English |
|---|---|
| Article number | 102593 |
| Pages (from-to) | 1-23 |
| Number of pages | 23 |
| Journal | Journal of Health Economics |
| Volume | 82 |
| Early online date | 30 Jan 2022 |
| DOIs | |
| Publication status | Published - Mar 2022 |
Bibliographical note
Funding Information:We thank Owen O’Donnell, Maarten Lindeboom and seminar participants at the Vrije Universiteit Amsterdam, University of Amsterdam, Gothenburg University, EEA Congress and EALE conference for useful comments. The authors gratefully acknowledge the financial support from Instituut Gak for this research project, as well as UWV for providing access to their data on DI applications. Results in this paper are based on non-public microdata from Statistics Netherlands (CBS). In principle, part of these microdata are accessible for statistical and scientific research. For further information, contact microdatacbs.nl.
Publisher Copyright:
© 2022 The Author(s)
Funding
We thank Owen O’Donnell, Maarten Lindeboom and seminar participants at the Vrije Universiteit Amsterdam, University of Amsterdam, Gothenburg University, EEA Congress and EALE conference for useful comments. The authors gratefully acknowledge the financial support from Instituut Gak for this research project, as well as UWV for providing access to their data on DI applications. Results in this paper are based on non-public microdata from Statistics Netherlands (CBS). In principle, part of these microdata are accessible for statistical and scientific research. For further information, contact microdatacbs.nl.
Keywords
- Disability insurance
- Health shocks
- Labor supply
- Mental health