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The Rise and Fall of Disability Insurance Enrollment in the Netherlands

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Listed:
  • Pierre Koning
  • Maarten Lindeboom

Abstract

As recently as 15 years ago, the high level of Disability Insurance (DI) enrollment was considered to be one of the major social and economic problems of the Netherlands; indeed, the Netherlands was characterized as the country with the most out-of-control disability program of OECD countries. But since about 2002, the Netherlands has seen a spectacular decline in its Disability Insurance enrollment rate. Radical reforms to the Dutch DI system were implemented over the period 1996 to 2006. We cluster these reforms in three broad categories: 1) reducing the incentives of employers to move workers to disability; 2) increased gatekeeping; and 3) tightening disability eligibility criteria while enhancing worker incentives. The reforms appear to have been very effective. Since 2002, yearly DI inflow rates dropped from 1.5 percent in 2001 to about 0.5 percent of the insured population in 2012. We argue that particularly the interaction of employer incentives and formal employer obligations has contributed to the substantial decrease in DI inflow. On the downside, however, it seems workers with bad health have sorted into temporary employment—without employers bearing the financial responsibility of their benefit costs.

Suggested Citation

  • Pierre Koning & Maarten Lindeboom, 2015. "The Rise and Fall of Disability Insurance Enrollment in the Netherlands," Journal of Economic Perspectives, American Economic Association, vol. 29(2), pages 151-172, Spring.
  • Handle: RePEc:aea:jecper:v:29:y:2015:i:2:p:151-72
    Note: DOI: 10.1257/jep.29.2.151
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    References listed on IDEAS

    as
    1. Pierre Koning, 2009. "Experience Rating and the Inflow into Disability Insurance," De Economist, Springer, vol. 157(3), pages 315-335, September.
    2. Pierre Koning & Daniel van Vuuren, 2010. "Disability insurance and unemployment insurance as substitute pathways," Applied Economics, Taylor & Francis Journals, vol. 42(5), pages 575-588.
    3. Lex Borghans & Anne C. Gielen & Erzo F. P. Luttmer, 2014. "Social Support Substitution and the Earnings Rebound: Evidence from a Regression Discontinuity in Disability Insurance Reform," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 34-70, November.
    4. Annemiek Vuren & Daniel Vuuren, 2007. "Financial Incentives in Disability Insurance in the Netherlands," De Economist, Springer, vol. 155(1), pages 73-98, March.
    5. David H. Autor & Mark G. Duggan, 2006. "The Growth in the Social Security Disability Rolls: A Fiscal Crisis Unfolding," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 71-96, Summer.
    6. David H. Autor, 2015. "The unsustainable rise of the disability rolls in the United States: causes, consequences and policy options," Chapters, in: John Karl Scholz & Hyungypo Moon & Sang-Hyup Lee (ed.), Social Policies in an Age of Austerity, chapter 5, pages 107-136, Edward Elgar Publishing.
    7. Pierre Koning & Daniel Van Vuuren, 2007. "Hidden Unemployment in Disability Insurance," LABOUR, CEIS, vol. 21(4‐5), pages 611-636, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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