Income and Substitution Effects of a Disability Insurance Reform

Beatrix Eugster and Eva Deuchert

No 1709, Economics Working Paper Series from University of St. Gallen, School of Economics and Political Science

Abstract: Disability insurance (DI) systems are widely criticized for their inherent work disincentives. This paper evaluates the effects of a Swiss DI reform that aims to lower pensions for a group of existing DI bene?ciaries and introduces an additional notch to the pension schedule. The reform does not signi?cantly affect average earnings and employment, but increases the disability degree of those threatened by a pension decline. We estimate bounds on the income and substitution effects employing the principal strati?cation framework. The in-come effect is quantitatively important, while the substitution e?ect is smaller and bounds include zero.

Keywords: Disability insurance; work disincentives; income and substitution effects; partial bene?t system (search for similar items in EconPapers)
JEL-codes: C30 I13 J01 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2017-07
New Economics Papers: this item is included in nep-eur, nep-hea, nep-ias and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Income and substitution effects of a disability insurance reform (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:usg:econwp:2017:09

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