Earnings responses to disability benefit cuts

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. TI 2018-023/V

Classification and Topics

• Classification: Wirtschaft ; National Government Expenditures and Welfare Programs ; Social Security and Public Pensions ; Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination ; Time Allocation and Labor Supply
• Subject: Disability Insurance ; Health ; Employment ; Earnings

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Garcia Mandico, Silvia ; Garcia-Gomez, Pilar ; Gielen, Anne C. ; O'Donnell, Owen
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/177713
• Last update: 14.05.2025, 4:44 AM CEST