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Return-to-work policies’ clawback regime and labor supply in disability insurance programs

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  • Zaresani, Arezou
  • Olivo-Villabrille, Miguel

Abstract

Exploiting a quasi-natural experiment and using administrative data, we examine the effects of the return-to-work policies’ clawback regime in Disability Insurance (DI) programs on beneficiaries’ labor supply decisions, allowing them to collect reduced DI payments while working. We compare two return-to-work policies: one with a single rate clawback regime and another featuring a more generous clawback regime, where a reform further increased its generosity. The reform caused an increase in the mean labor supply: beneficiaries who already work, work more, and those who did not work started working. The effects are heterogeneous by beneficiaries’ characteristics, and the increase is driven mainly by top percentiles of earnings. Findings suggest an essential role for the clawback regime in return-to-work policies and targeted policies to increase the labor supply in DI programs.

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  • Zaresani, Arezou & Olivo-Villabrille, Miguel, 2022. "Return-to-work policies’ clawback regime and labor supply in disability insurance programs," Labour Economics, Elsevier, vol. 78(C).
  • Handle: RePEc:eee:labeco:v:78:y:2022:i:c:s0927537122001063
    DOI: 10.1016/j.labeco.2022.102215
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    Cited by:

    1. Paukkeri, Tuuli & Ravaska, Terhi, 2024. "Labour supply responses to reducing the risk of losing disability insurance benefits," Working Papers 163, VATT Institute for Economic Research.
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    3. Tuuli Paukkeri & Terhi Ravaska, 2024. "Labour Supply Responses to Reducing the Risk of Losing Disability Insurance Benefits," Working Papers 20, Finnish Centre of Excellence in Tax Systems Research.
    4. Chiara Dal Bianco, 2023. "Disability Insurance and the Effects of Return-to-work Policies," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 49, pages 351-373, July.

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    More about this item

    Keywords

    Disability insurance; Clawback rate; Return-to-work policy; Financial incentives; Labor supply;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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