Social Interaction Effects in Disability Pension Participation. Evidence from Plant Downsizing

Arbeitspapier

We estimate the magnitude of social interaction effects in disability pension participation among older workers in Norway. Specifically, we investigate how a worker's propensity to draw disability benefits is affected by a plausibly exogenous shock to the disability entry rate of similarly-aged workers in his or her neighborhood. The problem of omitted variable bias is addressed by employing a novel instrumental variable (IV) strategy, using plant downsizing at neighbors' plants of employment as an instrument for the disability entry rate among one's previously employed neighbors. Our IV estimates suggest that a one percentage point increase in the participation rate of previously employed neighbors increased the subsequent 4-year entry rate of workers by about one-half a percentage point. Numerous robustness and specification tests appear to support the validity of the identifying assumption in our IV strategy.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Papers ; No. 496

Classification and Topics

• Classification: Wirtschaft ; Social Security and Public Pensions ; Health Behavior ; Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs ; Labor Turnover; Vacancies; Layoffs ; Unemployment Insurance; Severance Pay; Plant Closings
• Subject: disability ; downsizing ; layoffs ; plant closings ; social insurance ; social interaction ; welfare norms

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Rege, Mari ; Telle, Kjetil ; Votruba, Mark
• Event: Veröffentlichung
• (who): Statistics Norway, Research Department
• (where): Oslo
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/192478