Earnings capacity of disability insurance recipients (joint with Silvia Garcia-Mandico, Pilar Garcia-Gomez and Anne C Gielen)

Wednesday 20 February 2019, 1.00PM to 2.15pm

Speaker(s): Owen O'Donnell (Erasmus)

Abstract: Accurate assessment of earnings capacity is critical to the efficient operation of disability insurance (DI) programs. We use administrative data on the universe of Dutch DI recipients to estimate employment and earnings responses to reassessment of earnings capacity under more stringent rules. We estimate that reassessment removed 17 percent from the program and reduced benefit income by 20 percent, on average. In response, employment increased by 6.7 percentage points and earnings rose by 18 percent. Recipients were able to increase earnings by e636 for every e1000 of benefit income lost. This earnings response was largest from those with more subjectively defined disabilities. Consistent with earnings capacity deteriorating with claim duration, reassessment had the least impact on the benefits and earnings of those who had been claiming DI for longest.

Paper: Earnings capacity of disability insurance recipients (PDF , 867kb)

Location: ARC/014 Alan Maynard Auditorium

Admission: All welcome