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The earnings and employment losses before entering the disability system

Author

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  • Maria Cervini-Pla

    (Universitat Pompeu Fabra & EQUALITAS)

  • Judit Vall Castelló

    (Universitat Pompeu Fabra)

Abstract

Although a number of papers in the literature have shown the employment and wage differences between individuals receiving disability benefits and non-disabled individuals, not much is known about the potential employment and wage losses that disabled individuals suffer before being officially accepted into the disability insurance system (DI). Therefore, in this paper we compare individuals that enter into the DI system due to a progressive deterioration in the health status (ordinary illness) to similar non-disabled individuals. Our aim is to identify the differences in employment and wages between these two groups before disabled individuals are officially accepted into the DI system. We combine matching models and difference-in-difference and we find that the wage (employment) growth patterns of both groups of workers become significantly different three (five) years before entering the DI system. More specifically, our estimates suggest that 1 year before entering the system, there is a difference of 79 Euros/month in the wages of the two groups (8.3% of average wage) as well as a 7.8% point difference in employment probabilities.

Suggested Citation

  • Maria Cervini-Pla & Judit Vall Castelló, 2018. "The earnings and employment losses before entering the disability system," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(8), pages 1111-1128, November.
    • Handle: RePEc:spr:eujhec:v:19:y:2018:i:8:d:10.1007_s10198-018-0960-8
    DOI: 10.1007/s10198-018-0960-8
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    1. Pilar García-Gómez & Sergi Jiménez-Martín & Judit Vall Castelló, 2017. "Health Capacity to Work at Older Ages: Evidence from Spain," NBER Chapters, in: Social Security Programs and Retirement around the World: The Capacity to Work at Older Ages, pages 269-300, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Disabled individuals; Employment and wage loss; Disability benefits;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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