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Social Interaction Effects in Disability Pension Participation: Evidence from Plant Downsizing

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  • Rege, Mari

    ()
    (University of Stavanger)

  • Telle, Kjetil

    (Statistics Norway)

  • Votruba, Mark

    (Case Western Reserve University)

Abstract

We estimate the magnitude of social interaction effects in disability pension participation among older workers in Norway. Specifically, we investigate how a worker’s propensity to draw disability benefits is affected by a plausibly exogenous shock to the disability entry rate of similarly-aged workers in his or her neighborhood. The problem of omitted variable bias is addressed by employing a novel instrumental variable (IV) strategy, using plant downsizing at neighbors’ plants of employment as an instrument for the disability entry rate among one’s previously employed neighbors. Our IV estimates suggest that a one percentage point increase in the participation rate of previously employed neighbors increased the subsequent 4-year entry rate of workers by about one-half a percentage point. Numerous robustness and specification tests appear to support the validity of the identifying assumption in our IV strategy.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Paper provided by University of Stavanger in its series UiS Working Papers in Economics and Finance with number 2009/30.

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Length: 53 pages
Date of creation: 30 Jun 2009
Date of revision:
Handle: RePEc:hhs:stavef:2009_030

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Postal: University of Stavanger, NO-4036 Stavanger, Norway
Web page: http://www.uis.no/research/economics_and_finance
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Related research

Keywords: disability; downsizing; layoffs; plant closing; social insurance; social interaction; welfare norms;

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References

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Citations

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Cited by:
  1. Markussen, Simen & Røed, Knut, 2012. "Social Insurance Networks," IZA Discussion Papers 6446, Institute for the Study of Labor (IZA).
  2. Bratberg, Espen & Nilsen, Øivind Anti & Vaage, Kjell, 2012. "Is Recipiency of Disability Pension Hereditary?," Working Papers in Economics 07/12, University of Bergen, Department of Economics.
  3. Dahl, Gordon B. & Loken, Katrine Vellesen & Mogstad, Magne, 2012. "Peer Effects in Program Participation," IZA Discussion Papers 6681, Institute for the Study of Labor (IZA).
  4. Ethan Cohen-Cole & Giulio Zanella, 2008. "Welfare Stigma or Information Sharing? Decomposing Social Interactions Effects in Social Benefit Use," Department of Economics University of Siena 531, Department of Economics, University of Siena.
  5. Blume, Lawrence E. & Brock, William A. & Durlauf, Steven N. & Jayaraman, Rajshri, 2013. "Linear Social Interactions Models," Economics Series 298, Institute for Advanced Studies.
  6. Torbjørn Hægeland & Dag Rønningen & Kjell G. Salvanes, 2007. "Adapt or withdraw? Evidence on technological changes and early retirement using matched worker-firm data," Discussion Papers 509, Research Department of Statistics Norway.
  7. Steven J. Atlas & Jonathan Skinner, 2010. "Education and the Prevalence of Pain," NBER Chapters, in: Research Findings in the Economics of Aging, pages 145-166 National Bureau of Economic Research, Inc.
  8. Kroft, Kory, 2008. "Takeup, social multipliers and optimal social insurance," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 722-737, April.
  9. Henningsen, Morten, 2008. "Benefit shifting: The case of sickness insurance for the unemployed," Labour Economics, Elsevier, vol. 15(6), pages 1238-1269, December.

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