Arbeitspapier

Why Do Temporary Workers Have Higher Disability Insurance Risks Than Permanent Workers?

Workers with fixed-term contracts typically have worse health than workers with permanent contracts. We show that these differences in health translate into a substantially higher (30%) risk of applying for disability insurance (DI) in the Netherlands. Using unique administrative data on health and labor market outcomes of all employees in the Netherlands, we decompose this differential into: (i) selection of workers types into fixed-term contracts; (ii) the causal impact of temporary work conditions on worker health; (iii) the impact of differential employer incentives to reintegrate ill workers; and (iv) the differential impact of labor market prospects on the decision to apply for DI benefits. We find that selection actually masks part of the DI risk premium, whereas the causal impact of temporary work conditions on worker health is limited. At the same time, the differences in employer commitment during illness and differences in labor market prospects between fixed-term and permanent workers jointly explain more than 80% of the higher DI risk.

Language
Englisch

Bibliographic citation
Series: Tinbergen Institute Discussion Paper ; No. TI 2022-024/V

Classification
Wirtschaft
National Government Expenditures and Welfare Programs
Labor Economics Policies
Subject
Disability Insurance
Temporary Work
Employer Incentives
Worker Health

Event
Geistige Schöpfung
(who)
Koning, Pierre
Muller, Paul
Prudon, Roger
Event
Veröffentlichung
(who)
Tinbergen Institute
(where)
Amsterdam and Rotterdam
(when)
2022

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Koning, Pierre
  • Muller, Paul
  • Prudon, Roger
  • Tinbergen Institute

Time of origin

  • 2022

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