Occupational hazards and social disability insurance

Amanda Michaud and David Wiczer

Journal of Monetary Economics, 2018, vol. 96, issue C, 77-92

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 6.3% relative to actuarially fair insurance, mostly due to risk sharing.

Keywords: Disability insurance; Occupational choice; Optimal policy (search for similar items in EconPapers)
JEL-codes: E62 I13 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (16)

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Related works:
Working Paper: Occupational Hazards and Social Disability Insurance (2017)
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:eee:moneco:v:96:y:2018:i:c:p:77-92

DOI: 10.1016/j.jmoneco.2018.04.002

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