The decentralization of Social Assistance and the rise of Disability Insurance enrolment

Gijs Roelofs and Daniel van Vuuren

No 185, CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: In this paper, we assess spillover effects of Social Assistance (SA) decentralization in the Netherlands, in particular towards (a centrally administered) Disability Insurance scheme (DI). DI enrolment has increased strongly since the decentralization of SA. Many economists and policymakers believe that fiscal decentralization, the decentralization of government expenditures to local governments, enhances public sector efficiency. Vertical externalities – i.e. spillovers between local and central government – may however undo part of this advantage. In this paper, we assess spillover effects of Social Assistance (SA) decentralization in the Netherlands, in particular towards (a centrally administered) Disability Insurance scheme (DI). DI enrolment strongly increased since the decentralization of SA. We find that the sensitivity of local DI enrolment with respect to the stock of local SA recipients has increased over time, given that we control for both observed and unobserved disability risk factors. IV estimates show that, since the decentralization of SA, at least one third of DI inflow was diverted from SA.

JEL-codes: H40 H53 H70 (search for similar items in EconPapers)
Date: 2011-07
New Economics Papers: this item is included in nep-hea, nep-ias and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: The Decentralization of Social Assistance and the Rise of Disability Insurance Enrolment (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:cpb:discus:185

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