Earnings responses to disability insurance stringency

Sílvia Garcia-Mandicó, Pilar Garcia-Gomez, Anne Gielen and O’Donnell, Owen
Authors registered in the RePEc Author Service: Owen O'Donnell

Labour Economics, 2020, vol. 66, issue C

Abstract: Accurate assessment of earnings capacity is critical to the efficient operation of disability insurance (DI) programs. We use administrative data on the universe of Dutch DI recipients to estimate employment and earnings responses to reassessment of their earnings capacity under more stringent rules. We estimate that reassessment of recipients aged 30–44 removed 17 percent from the program and reduced benefit income by 20 percent, on average. In response, employment increased by 6.7 percentage points and earnings rose by 18 percent. Recipients were able to increase earnings by € 636 for every € 1000 reduction in DI benefit. This earnings response was strongest from those with more subjectively defined disabilities and a shorter claim duration, as well as younger and female recipients.

Keywords: Disability insurance; Health; Employment; Earnings (search for similar items in EconPapers)
JEL-codes: H53 H55 J14 J22 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:66:y:2020:i:c:s0927537120300841

DOI: 10.1016/j.labeco.2020.101880

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