How Does Disability Affect Incomes? An Empirical Study on Older European Workers

Justine Bondoux, Thomas Barnay, Florence Jusot and Thomas Renaud
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Justine Bondoux: ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel
Thomas Barnay: ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel
Florence Jusot: Legos - Laboratoire d'Economie et de Gestion des Organisations de Santé - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres, IRDES - Institut de Recherche et Documentation en Economie de la Santé - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique
Thomas Renaud: Legos - Laboratoire d'Economie et de Gestion des Organisations de Santé - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres, IRDES - Institut de Recherche et Documentation en Economie de la Santé - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres, BPH - Bordeaux population health - UB - Université de Bordeaux - Institut de Santé Publique, d'Épidémiologie et de Développement (ISPED) - INSERM - Institut National de la Santé et de la Recherche Médicale, CESCO - Centre d'Ecologie et des Sciences de la COnservation - MNHN - Muséum national d'Histoire naturelle - SU - Sorbonne Université - CNRS - Centre National de la Recherche Scientifique, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique, DAAA, ONERA, Institut Polytechnique de Paris [Meudon] - ONERA - IP Paris - Institut Polytechnique de Paris

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Abstract: This paper studies the impact of the onset of disability on personal income. Using the Survey of Health, Ageing and Retirement in Europe, we compare income trajectories of individuals who experience disability with those who remain healthy over the same period. We hypothesize that the onset of disability reduces overall personal income, as the loss in wages is not fully compensated by disability-related benefits. To identify the causal impact, we combine a difference-in-differences approach with kernel propensity score matching, controlling for both observable and time-invariantunobservable individual characteristics. Our results confirm this hypothesis, show-ing a substantial decrease in personal income driven primarily by reduced wages.We further investigate heterogeneous effects by gender and the generosity of social welfare systems, showing that more generous welfare states mitigate income losses due to disability.

Keywords: Compensation Incomes; Disability; Income; Personal Income; Wages; Weighted Difference-in-Differences; Kernel Matching; Disability Insurance Benefits (search for similar items in EconPapers)
Date: 2025-06
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Published in Annals of Economics and Statistics, 2025, 158

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05482497

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