Selective Exercise of Discretion in Disability Insurance Awards

Pilar Garcia-Gomez, Pierre Koning, Owen O'Donnell and Carlos Riumallo Herl ()
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Carlos Riumallo Herl: Erasmus University Rotterdam

No 15928, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Variation in assessor stringency in awarding benefits leaves applicants exposed to uninsured risk that could be systematic if discretion were exercised selectively. We test for this using administrative data on applications to the Dutch disability insurance program. We find that discretion is more often exercised in favor of lower-waged applicants. Pre-disability wages drop discontinuously just above disability thresholds for entitlement to partial benefits. Assessors are more likely to discard the highest-paying algorithm-generated job matches that determine earnings capacity and entitlement when evaluating lower-waged applicants. While these applicants benefit on average, they are exposed to greater risk from between assessor variation.

Keywords: disability insurance; screening (search for similar items in EconPapers)
JEL-codes: D73 H42 H55 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2023-02
New Economics Papers: this item is included in nep-hea, nep-lma and nep-rmg
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Published - published online in: Journal of Policy Analysis and Management , 29 Dezember 2023

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Working Paper: Selective Exercise of Discretion in Disability Insurance Awards (2022)
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