Income and Substitution Effects of a Disability Insurance Reform
Journal
Journal of Public Economics
ISSN
0047-2727
Type
journal article
Date Issued
2019-01
Author(s)
DOI
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 DI benefits for a group of exisiting DI beneficiaries and introduces an additional level to the DI benefit schedule. The reform has only modest effects on earnings and employment but increases the disability degree of those threatened by a DI benefit decline. We estimate bounds on the income and substitution effects by employing the principal stratification framework. The income effect is quantitatively important, whereas the substitution effect is smaller and has bounds that include zero. The evidence suggests that caseworkers helped the insured with low labor market attachment to maintain a full DI benefit.
Language
English
Keywords
disability insurance
work disincentives
income and substitution effects
partial benefit system
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Economic Policy
Refereed
Yes
Publisher
Elsevier
Volume
170
Start page
1
End page
14
Pages
14
Subject(s)
Eprints ID
256666
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1-s2.0-S0047272718302287-main.pdf
Size
513.51 KB
Format
Adobe PDF
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