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| Author | : David H. Autor |
| Publisher | : |
| Total Pages | : 68 |
| Release | : 2019 |
| Genre | : |
| ISBN | : |
Download Disability Benefits, Consumption Insurance, and Household Labor Supply Book in PDF, ePub and Kindle
There is no evaluation of the consequences of Disability Insurance (DI) receipt that captures the effects on households' net income and consumption expenditure, family labor supply, or benefits from other programs. Combining detailed register data from Norway with an instrumental variables approach based on random assignment to appellant judges, we comprehensively assess how DI receipt affects these understudied outcomes. To consider the welfare implications of the findings from this instrumental variables approach, we estimate a dynamic model of household behavior that translates employment, reapplication and savings decisions into revealed preferences for leisure and consumption. The model-based results suggest that on average, the willingness to pay for DI receipt is positive and sizable. Because spousal labor supply strongly buffers the household income and consumption effects of DI allowances, the estimated willingness to pay for DI receipt is smaller for married than single applicants.
| Author | : David H. Autor |
| Publisher | : |
| Total Pages | : 42 |
| Release | : 2017 |
| Genre | : Disability evaluation |
| ISBN | : |
Download Disability Benefits, Consumption Insurance, and Household Labor Supply Book in PDF, ePub and Kindle
While a mature literature finds that Disability Insurance (DI) receipt discourages work, the welfare implications of these findings depend on two rarely studied economic quantities: the full cost of DI allowances to taxpayers, summing over DI transfer payments, benefit substitution to or from other transfer programs, and induced changes in tax receipts; and the value that individuals and families place on receiving benefits in the event of disability. We comprehensively assess these missing margins in the context of Norway's DI system, drawing on two strengths of the Norwegian environment. First, Norwegian register data allow us to characterize the household impacts and fiscal costs of disability receipt by linking employment, taxation, benefits receipt, and assets at the person and household level. Second, random assignment of DI applicants to Norwegian judges who differ systematically in their leniency allows us to recover the causal effects of DI allowance on individuals at the margin of program entry. Accounting for the total effect of DI allowances on both household labor supply and net payments across all public transfer programs substantially alters our picture of the consumption benefits and fiscal costs of disability receipt. While DI allowance causes a significant increase in household income and consumption on average, it has little impact on income or consumption of married applicants because spousal earnings responses (via the added worker effect) and benefit substitution entirely offset DI benefit payments among those who are allowed relative to those who are denied. To develop the welfare implications of these findings, we estimate a dynamic model of household behavior that translates employment, reapplication and savings decisions into revealed preferences for leisure and consumption. We find that household valuation of receipt of DI benefits is considerably greater for single and unmarried individuals than for married couples because spousal labor supply substantially buffers household income and consumption in the event of DI denial.
| Author | : Jonathan Gruber |
| Publisher | : |
| Total Pages | : 56 |
| Release | : 1996 |
| Genre | : Disability insurance |
| ISBN | : |
Download Disability Insurance Benefits and Labor Supply Book in PDF, ePub and Kindle
Disability Insurance (DI) is a public program that provides income support to persons unable to continue work due to disability. The difficulty of defining disability, however, has raised the possibility that this program may be subsidizing the early retirement of workers who are not truly disabled. A critical input for assessing the optimal size of the DI program is therefore the elasticity of labor force participation with respect to benefits generosity. Unfortunately, this parameter has been difficult to estimate in the context of the U.S. DI program, since all workers face an identical benefits schedule. I surmount this problem by studying the experience of Canada, which operates two distinct DI programs, for Quebec and the rest of Canada. The latter program raised its benefits by 36% in January, 1987, while benefits were constant in Quebec, providing exogenous variation in benefits generosity across similar workers. I study this relative benefits increase using both simple `difference-in-difference' estimators and more parameterized estimators that exploit the differential impact of this policy change across workers. I find that there was a sizeable labor supply response to the policy change; my central estimates imply an elasticity of labor force non-participation with respect to DI benefits of 0.25 to 0.32. Despite this large labor supply response, simulations suggest that there were welfare gains from this policy change under plausible assumptions about preference parameters.
| Author | : Maxwell Dylan Kellogg |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2021 |
| Genre | : |
| ISBN | : |
Download Spousal Labor Supply and the Welfare Implications of Disability Insurance Reform Book in PDF, ePub and Kindle
This paper uses a life cycle model to study interactions between household self-insurance and the U.S. Disability Insurance (DI) system. The model is motivated and guided by evidence from panel data on disability onset in U.S. households, showing that married workers benefit from both higher self-insurance capacity and higher utilization of DI compared to unmarried workers--who are left, by contrast, more exposed to the costs of disability. These responses are consistent with adverse selection, whereby the long application process and strict work limitations of the DI system screen out worse self-insured workers. Accounting for household self-insurance and the implicit costs of utilizing the DI system, the model delivers novel insights into the welfare implications of DI reform. Welfare gains from DI reforms are large, especially ones that lower the costs of acquiring DI benefits and consequently provide income support to households that value it highly. Accounting for the substantial insurance value that expansionary reforms provide is important for drawing these welfare conclusions. On the other hand, accounting for the self-insurance provided by spousal labor supply and pooled family savings is also important, as it reduces welfare gains from DI reforms by as much as 25 percent.
| Author | : Siha Lee |
| Publisher | : |
| Total Pages | : 56 |
| Release | : 2019 |
| Genre | : Disability insurance |
| ISBN | : |
Download Household Responses to Disability Shocks Book in PDF, ePub and Kindle
This paper examines married women?s time allocation to market hours and spousal care in the event of their husbands? disability and its implications for evaluating the insurance value of the Social Security Disability Insurance (SSDI) program. First, I find that while spousal labor supply responses to husbands? disability are small, wives spend a sizable amount of time in spousal care after their husbands become disabled. Motivated by these facts, I develop a dynamic model of married households that incorporates husbands? disability status, wives? time allocation choices, health state dependent utility, and the institutional features of SSDI. Counterfactual experiments indicate that caregiving needs substantially attenuate spousal labor supply responses and increase the insurance value of SSDI relative to its costs. Furthermore, policy reforms such as supplementary caregiving benefits can improve social welfare.
| Author | : Frederic P. Slade |
| Publisher | : |
| Total Pages | : 18 |
| Release | : 1982 |
| Genre | : Disability insurance |
| ISBN | : |
Download Labor Supply Under Disability Insurance Book in PDF, ePub and Kindle
There has been a significant recent growth in the Social Security Administration's Disability Insurance (DI) program, both in the number of covered workers under the program and in the amount of monthly benefits, One possible factor causing this growth has been labor supply disincentives under the pro- gram. The labor supply decision by an individual involves the effect of the disability benefit structure (potential benefits) on labor force participation. Probit estimates from the 1969 original sample of the Longitudinal Retirement History Study (LRHS) indicated an elasticity of participation with respect to benefits of -0031 for married men aged 58-63, and -.023 for all men of the same age group. The magnitude of these estimates are much less than those found by authors such as Parsons, and suggest relatively insignificant efficiency losses in terns of reduced work effort
| Author | : Lukas Kauer |
| Publisher | : |
| Total Pages | : 41 |
| Release | : 2014 |
| Genre | : |
| ISBN | : |
Download The Effect of Cutting Disability Insurance Benefits on Labor Supply in Households Book in PDF, ePub and Kindle
| Author | : Per Pettersson-Lidbom |
| Publisher | : |
| Total Pages | : 36 |
| Release | : 2007 |
| Genre | : |
| ISBN | : |
Download Temporary Disability Insurance and Labor Supply Book in PDF, ePub and Kindle
All OECD countries but Korea have compulsory insurance programs for temporary disability,that is, cash benefits for non-work-connected sickness or injury. Despite the economic significance of these programs little is known about their effects on labor supply. This paper provides such evidence from a reform in Sweden which increased the replacement rate for some workers while the replacement rate for other workers were left unchanged. This allows us to use a differences-in-differences design to estimate the elasticity of lost work time with respect to benefits. We find a substantial labor supply effects of temporary disability benefits: the estimate that incorporates both the incidence and duration of claims is between 4 and 5, that is, a 10 percent increase in short term sickness benefits is associated with a 40-50 percent decline in work time.
| Author | : Anikó Bíró |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2023 |
| Genre | : |
| ISBN | : |
Download The Labor Market Effects of Disability Benefits Loss Book in PDF, ePub and Kindle
Disability benefits provide social insurance against the risk of losing working capacity, as well as an important source of income for individuals with disabilities. They are also costly and tend to reduce labor supply. Although spending can be contained by careful targeting, correcting past flaws in eligibility rules or assessment procedures may entail welfare costs. This paper studies a major reform in Hungary that reassessed the health and working capacity of a large share of beneficiaries. Leveraging age and health cutoffs in the reassessment, the paper estimates employment responses to loss or reduction of benefits. The findings show that among those who left disability insurance due to the reform, 58 percent were employed in the primary labor market, 6 percent participated in public works, and 36 percent were out of work without benefits in the post-reform period. The consequences of leaving disability insurance differed sharply by pre-reform employment status. Among the beneficiaries who were employed in the pre-reform year, 81 percent worked, while only 33 percent of those without pre-reform employment did. The gains of the reform in activating beneficiaries were small and strongly driven by pre-reform employment status. This points to the importance of combining financial incentives with broader labor market programs that increase employability.
| Author | : Jonathan Gruber |
| Publisher | : |
| Total Pages | : 48 |
| Release | : 1994 |
| Genre | : Age and employment |
| ISBN | : |
Download Disability Insurance Rejection Rates and the Labor Supply of Older Workers Book in PDF, ePub and Kindle
Disability Insurance (DI), which provides income support to disabled workers, has been criticized for inducing a large fall in the labor force participation rate of older workers. We study the effects of one policy response designed to address this moral hazard problem: raising the rate at which DI claims are denied. Initial DI applications are decided at the state level, and, in response to a funding crisis for the DI program in the late 1970s, the states raised their rejection rates for first time applicants by 30% on average. The extent of this rise, however, varied substantially across states. We use this variation to estimate a significant reduction in labor force non-participation among older workers in response to denial rate rises. A 10% increase in denial rates led to a 2.7% fall in non- participation among 45-64 year old males; between 1/2 and 2/3 of this effect is a true reduction in labor force leaving, with the remainder accounted for by the return to work of denied applicants. We find some support for the notion that increases in denial rates effectively target their incentive effects to more able individuals; the fall in labor force non-participation was much stronger among more able workers, according to an anthropometric measure of disability.
