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Disability in the Welfare State: An Unemployment Problem in Disguise?

Bernt Bratsberg (), Elisabeth Fevang () and Knut Røed ()

No 4897, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Economies with low unemployment often have high disability rates. In Norway, the permanent disability insurance rolls outnumber registered unemployment by four to one. Based on administrative register data matched with firms' financial statements and closure data collected from bankruptcy proceedings, we show that a large fraction of Norwegian disability insurance claims can be directly attributed to job displacement and other adverse shocks to employment opportunities. For men, we estimate that job loss more than doubles the risk of entry to permanent disability and that displacements account for fully 28 percent of all new disability insurance claims. We conclude that unemployment and disability insurance are close substitutes.

Keywords: social insurance; displacement; disability; employment opportunities (search for similar items in EconPapers)
JEL-codes: H55 I12 I38 J63 J65 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2010-04
New Economics Papers: this item is included in nep-ias and nep-lab
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Published - revised version published as 'Job Loss and Disability Insurance' in: Labour Economics, 2013, 24, 137–150

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