How Financial Incentives Induce Disability Insurance Recipients to Return to Work

Andreas Kostøl and Magne Mogstad

American Economic Review, 2014, vol. 104, issue 2, 624-55

Abstract: Using a local randomized experiment that arises from a sharp discontinuity in Disability Insurance (DI) policy in Norway, we provide transparent and credible identification of how financial incentives induce DI recipients to return to work. We find that many DI recipients have considerable capacity to work that can be effectively induced by providing financial work incentives. We further show that providing work incentives to DI recipients may both increase their disposable income and reduce program costs. Our findings also suggest that targeted policies may be the most effective in encouraging DI recipients to return to work.

JEL-codes: D14 H55 J14 J22 J28 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/aer.104.2.624
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Citations: View citations in EconPapers (129)

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Related works:
Working Paper: How Financial Incentives Induce Disability Insurance Recipients to Return to Work (2013)
Working Paper: How Financial Incentives Induce Disability Insurance Recipients to Return to Work (2012)
Working Paper: How financial incentives induce disability insurance recipients to return to work (2012)
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