IDEAS home Printed from https://ideas.repec.org/p/fip/fedlwp/2014-024.html
   My bibliography  Save this paper

Occupational hazards and social disability insurance

Author

Listed:
  • Amanda M. Michaud
  • David Wiczer

Abstract

Using retrospective data, we introduce evidence that occupational exposure significantly affects disability risk. Incorporating this into a general equilibrium model, social disability insurance (SDI) affects welfare through (i) the classic, risk-sharing channel and (ii) a new channel of occupational reallocation. Both channels can increase welfare, but at the optimal SDI they are at odds. Welfare gains from additional risk-sharing are reduced by overly incentivizing workers to choose risky occupations. In a calibration, optimal SDI increases welfare by 2.6% relative to actuarially fair insurance, mostly due to risk sharing.

Suggested Citation

  • Amanda M. Michaud & David Wiczer, 2014. "Occupational hazards and social disability insurance," Working Papers 2014-24, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:2014-024
    as

    Download full text from publisher

    File URL: http://research.stlouisfed.org/wp/2014/2014-024.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bastian Ravesteijn & Hans van Kippersluis & Eddy van Doorslaer, 2018. "The wear and tear on health: What is the role of occupation?," Health Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 69-86, February.
    2. Fortin, Nicole & Lemieux, Thomas & Firpo, Sergio, 2011. "Decomposition Methods in Economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 1, pages 1-102, Elsevier.
    3. John Rust & Christopher Phelan, 1997. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Econometrica, Econometric Society, vol. 65(4), pages 781-832, July.
    4. Mikhail Golosov & Aleh Tsyvinski, 2006. "Designing Optimal Disability Insurance: A Case for Asset Testing," Journal of Political Economy, University of Chicago Press, vol. 114(2), pages 257-279, April.
    5. David H. Autor & Mark G. Duggan, 2006. "The Growth in the Social Security Disability Rolls: A Fiscal Crisis Unfolding," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 71-96, Summer.
    6. Morefield Brant & Ribar David C. & Ruhm Christopher J., 2012. "Occupational Status and Health Transitions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(3), pages 1-29, March.
    7. Kitao, Sagiri, 2014. "A life-cycle model of unemployment and disability insurance," Journal of Monetary Economics, Elsevier, vol. 68(C), pages 1-18.
    8. Jason M. Fletcher & Jody L. Sindelar & Shintaro Yamaguchi, 2011. "Cumulative effects of job characteristics on health," Health Economics, John Wiley & Sons, Ltd., vol. 20(5), pages 553-570, May.
    9. AfDB AfDB, . "Annual Report 2012," Annual Report, African Development Bank, number 461.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Occupational Hazards and Social Disability Insurance
      by Christian Zimmermann in NEP-DGE blog on 2017-11-04 02:18:29

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Naoki Aizawa & Soojin Kim & Serena Rhee, 2020. "Labor Market Screening and the Design of Social Insurance: An Equilibrium Analysis of the Labor Market for the Disabled," NBER Working Papers 27478, National Bureau of Economic Research, Inc.
    2. David Wiczer & Amanda Michaud, 2017. "The Disability Option: Labor Market Dynamics with Macroeconomic and Health Risks," 2017 Meeting Papers 1459, Society for Economic Dynamics.
    3. Hamish Low & Luigi Pistaferri, 2019. "Disability Insurance: Error Rates and Gender Differences," Economics Series Working Papers 889, University of Oxford, Department of Economics.
    4. Hamish Low & Luigi Pistaferri, 2020. "Disability Insurance: Theoretical Trade‐Offs and Empirical Evidence," Fiscal Studies, John Wiley & Sons, vol. 41(1), pages 129-164, March.
    5. Shah Rome Khan & Muhammad Imran Khan & Dr. Sardar Javaid Iqbal Khan, 2023. "An Investigation into the Statistical Significance of Labor Force Longevity in Brick Kilns and Marble Industry: A Case Study of Peshawar," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 9(2), pages 679-688.
    6. Fatih Guvenen & Burhan Kuruscu & Satoshi Tanaka & David Wiczer, 2020. "Multidimensional Skill Mismatch," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(1), pages 210-244, January.
    7. Jacobs, Lindsay, 2023. "Occupations, retirement, and the value of disability insurance," Journal of Public Economics, Elsevier, vol. 225(C).
    8. Feng, Zhigang & Zhao, Kai, 2018. "Employment-based health insurance and aggregate labor supply," Journal of Economic Behavior & Organization, Elsevier, vol. 154(C), pages 156-174.
    9. Michaud, Amanda & Nelson, Jaeger & Wiczer, David, 2018. "Vocational considerations and trends in Social Security Disability," The Journal of the Economics of Ageing, Elsevier, vol. 11(C), pages 41-51.
    10. Chaoran Chen & Zhigang Feng & Jiaying Gu, 2022. "Health, Health Insurance, and Inequality," Working Papers tecipa-730, University of Toronto, Department of Economics.
    11. Satoshi Tanaka & David Wiczer & Burhanettin Kuruscu & Fatih Guvenen, 2015. "Occupational Switching and Self-Discovery in the Labor Market," 2015 Meeting Papers 1181, Society for Economic Dynamics.
    12. Kim, Soojin & Rhee, Serena, 2018. "Measuring the effects of employment protection policies: Theory and evidence from the Americans with Disabilities Act," Labour Economics, Elsevier, vol. 54(C), pages 116-134.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ana Lucia Abeliansky & Holger Strulik, 2023. "Health and aging before and after retirement," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(4), pages 2825-2855, October.
    2. Strulik, Holger, 2022. "A health economic theory of occupational choice, aging, and longevity," Journal of Health Economics, Elsevier, vol. 82(C).
    3. Bastian Ravesteijn & Hans van Kippersluis & Eddy van Doorslaer, 2018. "The wear and tear on health: What is the role of occupation?," Health Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 69-86, February.
    4. Lahiri, Kajal & Song, Jae & Wixon, Bernard, 2008. "A model of Social Security Disability Insurance using matched SIPP/Administrative data," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 4-20, July.
    5. Jacobs, Lindsay, 2023. "Occupations, retirement, and the value of disability insurance," Journal of Public Economics, Elsevier, vol. 225(C).
    6. Kajitani, Shinya, 2015. "Which is worse for your long-term health, a white-collar or a blue-collar job?," Journal of the Japanese and International Economies, Elsevier, vol. 38(C), pages 228-243.
    7. Garrett Anstreicher, 2021. "Does increasing health care access reduce disability insurance caseloads? Evidence from the rural United States," Health Economics, John Wiley & Sons, Ltd., vol. 30(4), pages 786-802, April.
    8. Oliver Denk & Jean‐Baptiste Michau, 2018. "Optimal Social Security with Imperfect Tagging," Scandinavian Journal of Economics, Wiley Blackwell, vol. 120(3), pages 717-762, July.
    9. Meyer, S.C. & Künn-Nelen, A.C., 2014. "Do occupational demands explain the educational gradient in health?," Research Memorandum 016, Maastricht University, Graduate School of Business and Economics (GSBE).
    10. Michaud, Amanda & Nelson, Jaeger & Wiczer, David, 2018. "Vocational considerations and trends in Social Security Disability," The Journal of the Economics of Ageing, Elsevier, vol. 11(C), pages 41-51.
    11. Hamish Low & Luigi Pistaferri, 2015. "Disability Insurance and the Dynamics of the Incentive Insurance Trade-Off," American Economic Review, American Economic Association, vol. 105(10), pages 2986-3029, October.
    12. Ceriani,Lidia & Inchauste Comboni,Maria Gabriela & Olivieri,Sergio Daniel, 2015. "Understanding poverty reduction in Sri Lanka : evidence from 2002 to 2012/13," Policy Research Working Paper Series 7446, The World Bank.
    13. Nicholas Lawson, 2017. "Fiscal Externalities and Optimal Unemployment Insurance," American Economic Journal: Economic Policy, American Economic Association, vol. 9(4), pages 281-312, November.
    14. Daniela Piazzalunga & Maria Laura Di Tommaso, 2019. "The increase of the gender wage gap in Italy during the 2008-2012 economic crisis," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 17(2), pages 171-193, June.
    15. David Wiczer & Amanda Michaud, 2017. "The Disability Option: Labor Market Dynamics with Macroeconomic and Health Risks," 2017 Meeting Papers 1459, Society for Economic Dynamics.
    16. Tomi T. Kortela, 2011. "On the costs of disability insurance," 2011 Meeting Papers 445, Society for Economic Dynamics.
    17. Chiara Dal Bianco, 2023. "Disability Insurance and the Effects of Return-to-work Policies," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 49, pages 351-373, July.
    18. Hugo Benítez-Silva & Richard Disney & Sergi Jiménez-Martín, 2010. "Disability, capacity for work and the business cycle: an international perspective [Has the boom in incapacity benefit claimant numbers passed its peak?]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 25(63), pages 483-536.
    19. Belloni, Michele & Carrino, Ludovico & Meschi, Elena, 2022. "The impact of working conditions on mental health: Novel evidence from the UK," Labour Economics, Elsevier, vol. 76(C).
    20. Erin Strumpf, 2010. "Employer-sponsored health insurance for early retirees: impacts on retirement, health, and health care," International Journal of Health Economics and Management, Springer, vol. 10(2), pages 105-147, June.

    More about this item

    Keywords

    Disability Insurance; Occupational Choice; Optimal Policy;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedlwp:2014-024. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anna Oates (email available below). General contact details of provider: https://edirc.repec.org/data/frbslus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.