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Disability insurance and unemployment insurance as substitute pathways

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Author Info
Pierre Koning
Daniël van Vuuren ()

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Abstract

In this paper, we estimate the degree of substitution between enrolment into Disability Insurance (DI) and Unemployment Insurance (UI) in the Netherlands. Starting in the 1990s many policy measures aimed at reducing DI enrolment, and increase labour force participation. We quantify whether these policy measures have led to a reduction in hidden unemployment in DI. A side effect of the reforms may be increased pressure on UI. Therefore, we simultaneously estimate reverse substitution, that is, hidden disability in UI. To this end, we employ a sample of firms in the Dutch AVO database from the period 1993-2002. Using instrumental variables in a bivariate Tobit specification, we identify the hidden components in both respective schemes. The estimation results indicate that about 3% of all dismissals took place through DI, which implies that about one quarter of the DI enrolments observed in our sample in fact consists of hidden unemployment. We find no evidence for reverse substitution of disabled persons ending up in UI.

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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Papers with number 70.

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Date of creation: Aug 2006
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Handle: RePEc:cpb:discus:70

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Related research
Keywords: Firm behaviour; social security; disability; employment determination;

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Find related papers by JEL classification:
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
I12 - Health, Education, and Welfare - - Health - - - Health Production
J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. de Jong, Philip & Lindeboom, Maarten & van der Klaauw, Bas, 2006. "Screening Disability Insurance Applications," CEPR Discussion Papers 5564, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. 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. [Downloadable!]
  3. Mark Duggan & Perry Singleton & Jae Song, 2005. "Aching to Retire? The Rise in the Full Retirement Age and its Impact on the Disability Rolls," NBER Working Papers 11811, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier. [Downloadable!] (restricted)
  5. Riphahn, Regina T, 1997. "Disability Retirement and Unemployment--Substitute Pathways for Labour Force Exit? An Empirical Test for the Case of Germany," Applied Economics, Taylor and Francis Journals, vol. 29(5), pages 551-61, May. [Downloadable!] (restricted)
  6. Jonathan Gruber, 1996. "Disability Insurance Benefits and Labor Supply," NBER Working Papers 5866, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Rob Euwals & Daniël van Vuuren & Ronald Wolthoff, 2005. "Early retirement behaviour in the Netherlands; evidence from a policy reform," CPB Discussion Papers 52, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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  8. Pierre Koning & Daniël van Vuuren, 2006. "Hidden unemployment in disability insurance in the Netherlands; an empirical analysis based on employer data," CPB Discussion Papers 69, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  9. David H. Autor & Mark G. Duggan, 2003. "The Rise In The Disability Rolls And The Decline In Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 157-205, February. [Downloadable!] (restricted)
  10. Hassink, Wolter H J, 2000. "Job Destruction through Quits or Layoffs?," Applied Economics Letters, Taylor and Francis Journals, vol. 7(1), pages 45-47, January. [Downloadable!] (restricted)
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  1. Pierre Koning & Daniël van Vuuren, 2006. "Hidden unemployment in disability insurance in the Netherlands; an empirical analysis based on employer data," CPB Discussion Papers 69, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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