Fundamentally Reforming the DI System: Evidence from German Notch Cohorts

Björn Fischer-Weckemann, Johannes Geyer and Nicolas Ziebarth ()

No 30812, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies how the private DI market and consumers responded to a reform that abolished public occupational disability insurance (ODI) for German cohorts born after 1960. The first part shows a causal reduction in overall DI inflows by more than 30% in the long-run. The second part studies the private individual risk-rated ODI market. Representative data do not show substantial increases in take-up. A general equilibrium model featuring the social safety net, asymmetric information and administrative costs can rationalize these weak private-public interactions as well as stylized facts such as strong private ODI take-up gradients by income and health. It also simulates policies that could have increased take-up further in the course of the reform and assesses their welfare effects. However, although welfare improving, none of the feasible reforms would have increased take-up to more than 60%.

JEL-codes: H53 H55 I10 I14 I18 J14 J21 J26 (search for similar items in EconPapers)
Date: 2022-12
New Economics Papers: this item is included in nep-eur, nep-hea, nep-lma and nep-pbe
Note: AG EH LS PE
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