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Equal health, equal work? The role of disability benefits in employment after controlling for health status

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  • Eva Frutos
  • Judit Castello

Abstract

In Spain, an individual can be considered legally disabled in one of the following two ways: by either receiving a disability support benefit and/or holding a certificate of disability. Having at least one of these official sanctions entitles the disabled person to a number of financial and tax advantages. However, only support benefits entail a monthly allowance and, at the same time, the individual is required to undertake a different job to that of his/her previous one. To jointly estimate (after controlling for the health characteristics of the disabling condition and for unobserved factors) the probability of receiving disability benefits and the probability of working, we make use of a newly released database of individuals with a certificate of disability. Additionally, we exploit the rich set of health measures that this database also provides. Our results show that the probability of working is 5 % lower (average treatment effect, ATE) for those disabled individuals receiving benefits. However, when we perform the estimation for individuals with differing degrees of disability, the disincentive effects of the benefits are only significant for individuals with the mildest level of disability (33–44 %) i.e. those who are on the threshold of being disabled. Copyright Springer-Verlag Berlin Heidelberg 2015

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  • Eva Frutos & Judit Castello, 2015. "Equal health, equal work? The role of disability benefits in employment after controlling for health status," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(3), pages 329-340, April.
    • Handle: RePEc:spr:eujhec:v:16:y:2015:i:3:p:329-340
    DOI: 10.1007/s10198-014-0577-5
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    References listed on IDEAS

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    Cited by:

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    2. Raj, Harsh & Kumar, Himangshu & Nataraj, Manikantha, 2022. "Welfare policy and labour market outcomes among persons with disabilities (PwDs) in India: Evidence from the NSS 76th Round," MPRA Paper 112347, University Library of Munich, Germany.
    3. Tobias Müller & Stefan Boes, 2020. "Disability insurance benefits and labor supply decisions: evidence from a discontinuity in benefit awards," Empirical Economics, Springer, vol. 58(5), pages 2513-2544, May.
    4. Ernst, Ekkehard & Merola, Rossana & Reljic, Jelena, 2024. "Fiscal policy instruments for inclusive labour markets: A review," GLO Discussion Paper Series 1406, Global Labor Organization (GLO).
    5. Stijn Baert, 2016. "Wage subsidies and hiring chances for the disabled: some causal evidence," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(1), pages 71-86, January.
    6. Thomas Barnay & Emmanuel Duguet & Yann Videau, 2022. "Did the 2005 French Disabled workers Act increase the employment rate of people with disabilities? An econometric evaluation on panel data," Erudite Working Paper 2022-01, Erudite.
    7. Müller, Tobias & Boes, Stefan, 2016. "Disability Insurance Benefits and Labor Supply Choices: Evidence from a Discontinuity in Benefit Awards," MPRA Paper 70957, University Library of Munich, Germany.

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    More about this item

    Keywords

    Disability benefits; Employment probabilities; Health measures; Average treatment effect ; I18; J21;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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