Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2018-03-14
Number: 18-023/V
Author-Name: Silvia Garcia Mandico
Author-Workplace-Name: Erasmus University
Author-Name: Pilar (P.) Garcia-Gomez
Author-Workplace-Name: Tinbergen Institute, Erasmus University
Author-Name: Anne (A.C.) Gielen
Author-Workplace-Name: Tinbergen Institute, Erasmus University
Author-Name: Owen (O.A.) O'Donnell
Author-Workplace-Name: Tinbergen Institute Erasmus University
Title: Earnings responses to disability benefit cuts
Abstract: Using Dutch administrative data, we assess the work and earnings capacity of disability insurance (DI) recipients by estimating employment and earnings responses to benefit cuts. Reassessment of DI entitlement under more stringent criteria removed 14.4 percent of recipients from the program and reduced benefits by 20 percent, on average. In response, employment increased by 6.7 points and earnings rose by 18 percent. Recipients were able to increase earnings by 0.64 euro for each 1.00 euro of DI income lost. Female and younger recipients, as well as those with more subjectively defined disabilities, were able to increase earnings most. The earnings response declined as claim duration lengthened, suggesting that earnings capacity deteriorates while on DI. The deterioration was steepest for male, younger and fully disabled recipients. Working while claiming partial disability benefits appears to slow the deterioration of earnings capacity.
Classification-JEL: H53, H55, J14, J22
Keywords: Disability Insurance, Health, Employment, Earnings
File-Url: https://papers.tinbergen.nl/18023.pdf
File-Format: application/pdf
File-Size: 1116765 bytes
Handle: RePEc:tin:wpaper:20180023