Disability Benefits, Consumption Insurance, and Household Labor Supply

David Autor, Andreas Kostøl, Magne Mogstad and Bradley Setzler

No 23466, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: There is no evaluation of the consequences of Disability Insurance (DI) receipt that captures the effects on households' net income and consumption expenditure, family labor supply, or benefits from other programs. Combining detailed register data from Norway with an instrumental variables approach based on random assignment to appellant judges, we comprehensively assess how DI receipt affects these understudied outcomes. To consider the welfare implications of the findings from this instrumental variables approach, we estimate a dynamic model of household behavior that translates employment, reapplication and savings decisions into revealed preferences for leisure and consumption. The model-based results suggest that on average, the willingness to pay for DI receipt is positive and sizable. Because spousal labor supply strongly buffers the household income and consumption effects of DI allowances, the estimated willingness to pay for DI receipt is smaller for married than single applicants.

JEL-codes: H53 H55 I38 J22 (search for similar items in EconPapers)
Date: 2017-06
New Economics Papers: this item is included in nep-ias, nep-lma and nep-pbe
Note: AG LS PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

Published as David Autor & Andreas Kostøl & Magne Mogstad & Bradley Setzler, 2019. "Disability Benefits, Consumption Insurance, and Household Labor Supply," American Economic Review, vol 109(7), pages 2613-2654.

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Journal Article: Disability Benefits, Consumption Insurance, and Household Labor Supply (2019)
Working Paper: Disability benefits, consumption insurance, and household labor supply (2017)
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