IDEAS home Printed from https://ideas.repec.org/p/red/sed018/359.html
   My bibliography  Save this paper

Labor Market Screening and Social Insurance Program Design for the Disabled

Author

Listed:
  • Naoki Aizawa

    (University of Minnesota)

  • Serena Rhee

    (University of Hawaii Manoa)

  • Soojin Kim

    (Purdue University)

Abstract

This paper studies how to optimally design subsidies for disabled workers, accounting for both the worker- and firm-side responses in the labor market. We first provide empirical evidence that firms design job characteristics, such as the flexibility of work hours, to screen out disabled workers. Then, we develop an equilibrium labor market model where firms post a screening contract which consists of wage and job characteristics; and workers with different levels of disability make labor supply decisions. We estimate the model using the Health and Retirement Study data, and identify the key model parameters by exploiting the exogenous policy variation on employment (hiring) subsidies for the disabled. Using the estimated model, we quantify the policy impacts on workers’ labor supply and firms’ employment contract design. Then, we characterize the optimal mix of the disability insurance and employment (hiring) subsidies for the disabled and study their implications on equilibrium labor market outcomes for workers of different health statuses.

Suggested Citation

  • Naoki Aizawa & Serena Rhee & Soojin Kim, 2018. "Labor Market Screening and Social Insurance Program Design for the Disabled," 2018 Meeting Papers 359, Society for Economic Dynamics.
    • Handle: RePEc:red:sed018:359
    as

    Download full text from publisher

    File URL: https://red-files-public.s3.amazonaws.com/meetpapers/2018/paper_359.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. John Ameriks & Joseph Briggs & Andrew Caplin & Minjoon Lee & Matthew D. Shapiro & Christopher Tonetti, 2020. "Older Americans Would Work Longer If Jobs Were Flexible," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(1), pages 174-209, January.
    2. Daron Acemoglu & Joshua D. Angrist, 2001. "Consequences of Employment Protection? The Case of the Americans with Disabilities Act," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 915-957, October.
    3. Richard V. Burkhauser & J. S. Butler & Yang-Woo Kim & Robert R. Weathers II, 1999. "The Importance of Accommodation on the Timing of Disability Insurance Applications: Results from the Survey of Disability and Work and the Health and Retirement Study," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 589-611.
    4. Nicole Maestas & Kathleen J. Mullen & Alexander Strand, 2013. "Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt," American Economic Review, American Economic Association, vol. 103(5), pages 1797-1829, August.
    5. Burkhauser, Richard V. & Butler, J. S. & Kim, Yang Woo, 1995. "The importance of employer accommodation on the job duration of workers with disabilities: A hazard model approach," Labour Economics, Elsevier, vol. 2(2), pages 109-130, June.
    6. 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.
    7. Diamond, Peter & Sheshinski, Eytan, 1995. "Economic aspects of optimal disability benefits," Journal of Public Economics, Elsevier, vol. 57(1), pages 1-23, May.
    Full references (including those not matched with items on IDEAS)

    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. 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.
    2. 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.
    3. Mason Ameri & Lisa Schur & Meera Adya & F. Scott Bentley & Patrick McKay & Douglas Kruse, 2018. "The Disability Employment Puzzle: A Field Experiment on Employer Hiring Behavior," ILR Review, Cornell University, ILR School, vol. 71(2), pages 329-364, March.
    4. Hamish Low & Luigi Pistaferri, 2010. "Disability Risk, Disability Insurance and Life Cycle Behavior," NBER Working Papers 15962, National Bureau of Economic Research, Inc.
    5. Burkhauser, Richard V. & Butler, J. S. & Gumus, Gulcin, 2003. "Dynamic Modeling of the SSDI Application Timing Decision: The Importance of Policy Variables," IZA Discussion Papers 942, Institute of Labor Economics (IZA).
    6. Hill, Matthew J. & Maestas, Nicole & Mullen, Kathleen J., 2016. "Employer accommodation and labor supply of disabled workers," Labour Economics, Elsevier, vol. 41(C), pages 291-303.
    7. 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.
    8. repec:eee:labchp:v:3:y:1999:i:pc:p:3417-3528 is not listed on IDEAS
    9. Simonetti, Irene & Belloni, Michele & Farina, Elena & Zantomio, Francesca, 2022. "Labour market institutions and long term adjustments to health shocks: Evidence from Italian administrative records," Labour Economics, Elsevier, vol. 79(C).
    10. Shu, Pian, 2015. "Asset accumulation and labor force participation of disability insurance applicants," Journal of Public Economics, Elsevier, vol. 129(C), pages 26-40.
    11. Daron Acemoglu & Joshua D. Angrist, 2001. "Consequences of Employment Protection? The Case of the Americans with Disabilities Act," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 915-957, October.
    12. 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.
    13. Assar Lindbeck & Mats Persson, 2013. "A continuous model of income insurance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(6), pages 938-960, December.
    14. 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.
    15. Katie M. Jajtner & Sophie Mitra & Christine Fountain & Austin Nichols, 2020. "Rising Income Inequality Through a Disability Lens: Trends in the United States 1981–2018," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 151(1), pages 81-114, August.
    16. Tomi T. Kortela, 2011. "On the costs of disability insurance," 2011 Meeting Papers 445, Society for Economic Dynamics.
    17. Helmuth Cremer & Jean‐Marie Lozachmeur & Pierre Pestieau, 2008. "Social Security And Retirement Decision: A Positive And Normative Approach," Journal of Economic Surveys, Wiley Blackwell, vol. 22(2), pages 213-233, April.
    18. Mikhail Golosov & Luigi Iovino, 2021. "Social Insurance, Information Revelation, and Lack of Commitment," Journal of Political Economy, University of Chicago Press, vol. 129(9), pages 2629-2665.
    19. Barbara Broadway & Sonja C. Kassenboehmer, 2019. "Employment effects of job counseling for disability insurance recipients," Melbourne Institute Working Paper Series wp2019n18, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    20. Manasi Deshpande & Yue Li, 2019. "Who Is Screened Out? Application Costs and the Targeting of Disability Programs," American Economic Journal: Economic Policy, American Economic Association, vol. 11(4), pages 213-248, November.
    21. Krueger, Alan B. & Meyer, Bruce D., 2002. "Labor supply effects of social insurance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 33, pages 2327-2392, Elsevier.

    More about this item

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

    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:red:sed018:359. 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: Christian Zimmermann (email available below). General contact details of provider: https://edirc.repec.org/data/sedddea.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.