Labor supply effects of social insurance
Alan Krueger and
Chapter 33 in Handbook of Public Economics, 2002, vol. 4, pp 2327-2392 from Elsevier
This chapter examines the labor supply effects of social insurance programs. We argue that this topic deserves separate treatment from the rest of the labor supply literature because individuals may be imperfectly informed as to the rules of the programs and because key parameters are likely to differ for those who are eligible for social insurance programs, such as the disabled. Furthermore, differences in social insurance programs often provide natural experiments with exogenous changes in wages or incomes that can be used to estimate labor supply responses. Finally, social insurance often affects different margins of labor supply. For example, the labor supply literature deals mostly with adjustments in the number of hours worked, whereas the incentives of social insurance programs frequently affect the decision of whether to work at all.The empirical work on unemployment insurance (UI) and workers' compensation (WC) insurance finds that the programs tend to increase the length of time employees spend out of work. Most of the estimates of the elasticities of lost work time that incorporate both the incidence and duration of claims are close to 1.0 for unemployment insurance and between 0.5 and 1.0 for workers' compensation. These elasticities are substantially larger than the labor supply elasticities typically found for men in studies of the effects of wages or taxes on hours of work. The evidence on disability insurance and (especially) social security retirement suggests much smaller and less conclusively established labor supply effects. Part of the explanation for this difference probably lies in the fact that UI and WC lead to short-run variation in wages with mostly a substitution effect. Our review suggests that it would be misleading to apply a universal set of labor supply elasticities to these diverse problems and populations.
JEL-codes: H0 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: View citations in EconPapers (126) Track citations by RSS feed
Downloads: (external link)
http://www.sciencedirect.com/science/article/B7P63 ... 7d65b44d4ad6150233ee
Full text for ScienceDirect subscribers only
Working Paper: Labor Supply Effects of Social Insurance (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:pubchp:4-33
Access Statistics for this chapter
More chapters in Handbook of Public Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().