Workers' Moral Hazard and Insurer Effort in Disability Insurance

Arbeitspapier

Disability Insurance (DI) may affect workers' outcomes such as their probability to enter DI, to recover, and their employment. Supplementary insurance may increase these moral hazard effects, but also increases the financial gains of private insurers to reduce benefit costs. With increased insurer activities to prevent and reintegrate workers, the overall effects of increased insurance coverage on workers' outcomes are thus ambiguous. This paper aims to separate worker and insurer responses to increased insurance, using unique administrative data on firms' supplementary DI insurance contracts. Using a Two-Way Fixed-Effects model on the sickness and employment rates of worker cohorts with and without supplementary contracts at some point in time, we find that insurer efforts compensate workers' moral hazard effects.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 15164

Classification and Topics

• Classification: Wirtschaft ; Insurance; Insurance Companies; Actuarial Studies ; Labor Force and Employment, Size, and Structure
• Subject: disability insurance ; private insurance ; moral hazard ; insurer effort ; return-to-work policies

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Koning, Pierre ; van Lent, Max
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/263380
• Last update: 10.03.2025, 11:44 AM CET