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The decentralization of Social Assistance and the rise of Disability Insurance enrolment

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  • Gijs Roelofs

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  • Daniel van Vuuren

    ()

Abstract

In this paper, we assess spillover effects of Social Assistance (SA) decentralization in the Netherlands, in particular towards (a centrally administered) Disability Insurance scheme (DI). DI enrolment has increased strongly since the decentralization of SA. Many economists and policymakers believe that fiscal decentralization, the decentralization of government expenditures to local governments, enhances public sector efficiency. Vertical externalities – i.e. spillovers between local and central government – may however undo part of this advantage. In this paper, we assess spillover effects of Social Assistance (SA) decentralization in the Netherlands, in particular towards (a centrally administered) Disability Insurance scheme (DI). DI enrolment strongly increased since the decentralization of SA. We find that the sensitivity of local DI enrolment with respect to the stock of local SA recipients has increased over time, given that we control for both observed and unobserved disability risk factors. IV estimates show that, since the decentralization of SA, at least one third of DI inflow was diverted from SA.

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Bibliographic Info

Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 185.

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Date of creation: Jul 2011
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Handle: RePEc:cpb:discus:185

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  1. Pierre Koning & Daniel van Vuuren, 2006. "Disability insurance and unemployment insurance as substitute pathways," CPB Discussion Paper 70, CPB Netherlands Bureau for Economic Policy Analysis.
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  13. Ed Westerhout, 2001. "Disability Risk, Disability Benefits, and Equilibrium Unemployment," International Tax and Public Finance, Springer, vol. 8(3), pages 219-244, May.
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  17. Dan Black & Kermit Daniel & Seth Sanders, 2002. "The Impact of Economic Conditions on Participation in Disability Programs: Evidence from the Coal Boom and Bust," American Economic Review, American Economic Association, vol. 92(1), pages 27-50, March.
  18. Frits Bos, 2010. "Fiscal decentralisation in the Netherlands: History, current practice and economic theory," CPB Document 214, CPB Netherlands Bureau for Economic Policy Analysis.
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Cited by:
  1. van Sonsbeek, Jan-Maarten & Alblas, Ridwan, 2012. "Disability benefit microsimulation models in the Netherlands," Economic Modelling, Elsevier, vol. 29(3), pages 700-715.

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