Occupational Hazards and Social Disability Insurance

David Wiczer and Amanda Michaud

No 111, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: Using retrospective data, we introduce evidence that occupational exposure significantly affects disability risk. Incorporating this into a general equilibrium model, social disability insurance (SDI) affects welfare through (i) the classic, risk-sharing channel and (ii) a new channel of occupational reallocation. Both channels can increase welfare, but at the optimal SDI they are at odds. Welfare gains from additional risk-sharing are reduced by overly incentivizing workers to choose risky occupations. In a calibration, optimal SDI increases welfare by 2.6% relative to actuarially fair insurance, mostly due to risk sharing.

Date: 2017
New Economics Papers: this item is included in nep-dge, nep-hea and nep-ias
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Related works:
Journal Article: Occupational hazards and social disability insurance (2018)
Working Paper: Occupational Hazards and Social Disability Insurance (2017)
Working Paper: Occupational hazards and social disability insurance (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed017:111

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