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Award errors and permanent disability benefits in Spain

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  • Sergi Jimenez-Martin
  • Jose M. Labeaga
  • Cristina Vilaplana Prieto

Abstract

In this paper we estimate equations for deserving or "true disability indicator" and receiv- ing disability benefits to evaluate the award error as the difference between both probabilities using survey data from Spain. As expected award errors are not randomly distributed across the population. We find that individuals aged between 55 and 59, self-employed, working in an agricultural sector or living in a depressed region, have a significantly higher probability of receiving a benefit without deserving than the rest of individuals. We also find evidence of gender discrimination since males have a significantly higher probability of receiving a benefit without deserving it. Finally we show that the probability of getting a benefit being healthy is not distributed at random across the population. We have estimated the cost of wrongful benefit concession at a minimum of 1500 million euros or 0,2 percent of the Spanish GDP for year 2000. All these findings confirm that disability benefits are being used as an instrument for exiting the labor market for individuals approaching the early retirement age. Since the awarding process depends on Social Security Regional offices, this implies that some regional offices are applying loosely the requirements for granting disability benefits.

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Bibliographic Info

Paper provided by HEDG, c/o Department of Economics, University of York in its series Health, Econometrics and Data Group (HEDG) Working Papers with number 07/04.

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Date of creation: Apr 2007
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Handle: RePEc:yor:hectdg:07/04

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Postal: HEDG/HERC, Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
Phone: (0)1904 323776
Fax: (0)1904 323759
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Web page: http://www.york.ac.uk/economics/postgrad/herc/hedg/
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Keywords: Disability benefits; award error; early retirement; social security.;

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Citations

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Cited by:
  1. Hugo Benítez-Silva & Richard Disney & Sergi Jiménez-Martín, 2010. "Disability, capacity for work and the business cycle: an international perspective," Economic Policy, CEPR & CES & MSH, vol. 25, pages 483-536, 07.
  2. Pilar García Gómez & Sergi Jiménez Martín & Judit Vall Castello, 2010. "Health, disability and pathways into retirement in Spain," Working Papers 2010-24, FEDEA.
    • Pilar García-Gómez & Sergi Jiménez-Martín & Judit Vall Castelló, 2012. "Health, Disability, and Pathways into Retirement in Spain," NBER Chapters, in: Social Security Programs and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participatio, pages 127-174 National Bureau of Economic Research, Inc.
  3. Sergi Jiménez-Mart�n & José M. Labeaga & Cristina Vilaplana Prieto, 2006. "A sequential model of older workers' labor force transitions after a health shock," Health Economics, John Wiley & Sons, Ltd., vol. 15(9), pages 1033-1054.
  4. Guillem L�pez-Casasnovas & Catia Nicodemo, 2012. "Transition Probabilities and Duration Analysis among Disability States: Some Evidence from Spanish Data," Working Papers 643, Barcelona Graduate School of Economics.
  5. Judit Vall Castello, 2010. "Promoting Employment of Disabled Women in Spain; Evaluating a Policy," Working Papers 2010-10, FEDEA.
  6. Solé, Meritxell & Diaz-Serrano, Luis & Rodriguez Martinez, Marisol, 2010. "Work, Risk and Health: Differences between Immigrants and Natives in Spain," IZA Discussion Papers 5338, Institute for the Study of Labor (IZA).
  7. Gannon, Brenda, 2006. "Disability Benefit - Controlled or Under-Controlled?," Papers BP2007/1, Economic and Social Research Institute (ESRI).
  8. Solé, Meritxell & Díaz Serrano, Lluís & Rodríguez, Marisol, 2010. "Work, risk and health: differences between immigrants and natives in Spain," Working Papers 2072/151548, Universitat Rovira i Virgili, Department of Economics.
  9. repec:esr:chaptr:jacb200665 is not listed on IDEAS

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