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Tightening the Purse Strings: The Effect of Stricter DI Eligibility Criteria on Labor Supply

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  • Stefan Staubli

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Abstract

This paper explores the labor supply effects of a large-scale policy change in the Austrian disability insurance program, which tightened eligibility criteria for men above a certain age. Using administrative data on the universe of Austrian private-sector employees, the results of difference-in-difference type regressions suggest a substantial and statistically significant decline in disability enrollment of 5-5.7 percentage points and a modest increase in employment of 1.4 to 2.7 percentage points. On the other hand, the policy change had important spillover effects into the unemployment and sickness insurance program. Specifically, the share of individuals receiving unemployment benefits increased by roughly 3 and the share receiving sickness insurance benefits by 0.6 percentage points.

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File URL: http://www1.vwa.unisg.ch/RePEc/usg/dp2009/DP-0931-St.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2009 with number 2009-31.

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Length: 43 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:usg:dp2009:2009-31

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Keywords: Disability Insurance; Eligibility Criteria; Labor Supply; Policy Reform;

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  1. Bound, John & Burkhauser, Richard V., 1999. "Economic analysis of transfer programs targeted on people with disabilities," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 51, pages 3417-3528 Elsevier.
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  20. Lucie Schmidt & Purvi Sevak, 2004. "AFDC, SSI, and Welfare Reform Aggressiveness: Caseload Reductions versus Caseload Shifting," Journal of Human Resources, University of Wisconsin Press, vol. 39(3).
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