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Does Experience Rating Reduce Disability Inflow?

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  • Kyyrä, Tomi

    ()
    (VATT, Helsinki)

  • Tuomala, Juha

    ()
    (VATT, Helsinki)

Abstract

This study explores whether the experience rating of employers' disability insurance premiums affects the inflow of older employees to disability benefits in Finland. To identify the causal effect of experience rating, we exploit a pension reform that extended the coverage of the experience-rated premiums. The results show that a new disability benefit claim can cause substantial cost to the former employer through an increased premium. Nonetheless, we find no evidence of the significant effects of experience rating on the disability inflow. The lack of the behavioral effects may be due to the complexity of experience rating calculations and/or limited employer awareness.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7344.

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Length: 37 pages
Date of creation: Apr 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7344

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Keywords: experience rating; disability insurance; early retirement;

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  13. Pilar García-Gómez & Hans-Martin Gaudecker & Maarten Lindeboom, 2011. "Health, disability and work: patterns for the working age population," International Tax and Public Finance, Springer, Springer, vol. 18(2), pages 146-165, April.
  14. Ruser, John W, 1991. "Workers' Compensation and Occupational Injuries and Illnesses," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 9(4), pages 325-50, October.
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  16. Pierre Koning, 2009. "Experience Rating and the Inflow into Disability Insurance," De Economist, Springer, Springer, vol. 157(3), pages 315-335, September.
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