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Act Now: The Effects of the 2008 Spanish Disability Reform

Matthew J. Hill, José Silva () and Judit Vall Castello ()

Studies in Economics from School of Economics, University of Kent

Abstract: We evaluate the effects of a reduction in the generosity of the Spanish disability system (DI) implemented in 2008. The reform reduced the benefits for individuals that have a short contributory history relative to their age, theoretically discouraging potential applicants to disability. However, due to the method used to calculate the extent of lost benefits, the reform actually introduced an incentive for individuals to apply for disability now. We use a life-cycle model with heterogeneous disabled workers to understand the potential impact of the reform and confirm the predictions of the model empirically. Our estimates show that the reform increased the probability of applying to DI by 33% for men. Consistent with the theoretical model, the effect is much stronger for individuals that lost their job in the previous period (83%).

Keywords: disability benefits; life-cycle model; policy evaluation (search for similar items in EconPapers)
JEL-codes: C33 I18 H51 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-eur
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Journal Article: Act now: The effects of the 2008 Spanish disability reform (2019) Downloads
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