Getting Disabled Workers Back to Work: How Important Are Economic Incentives?

Elisabeth Fevang (), Inés Hardoy and Knut Røed ()

No 7137, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We investigate the impacts of economic incentives on the duration and outcome of temporary disability insurance (TDI) spells. The analysis is based on a large quasi-experiment in Norway, with a complete overhaul of the TDI benefit system. Our findings show that the labor supply of TDI claimants responds to both the benefit-level and to the level of local labor demand. The estimated elasticity of the employment hazard with respect to the benefit-level is – 0.3. We also find that the level of TDI benefits significantly affects the transition rate to alternative social insurance programs such as permanent disability and unemployment.

Keywords: hazard rate models; rehabilitation; temporary disability; labor supply (search for similar items in EconPapers)
JEL-codes: H55 I38 J22 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2013-01
New Economics Papers: this item is included in nep-hea and nep-lab
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Citations: View citations in EconPapers (9)

Forthcoming - revised version published as: 'Temporary disability and economic incentives' in: Economic Journal, 2017, 127 (603), 1410–1432.

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