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Why does temporary work increase disability insurance inflow?

Author

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  • Koning, Pierre
  • Muller, Paul
  • Prudon, Roger

Abstract

We show that workers with fixed-term contracts are substantially more likely to apply for and be awarded disability insurance (DI) benefits than permanent workers. We study whether this differential can be explained by (i) selection of worker types into contracts, (ii) the relation between contract type and the risk of illness, (iii) differences in employer support during illness, and (iv) differences in labour market prospects of ill workers. We find that selection actually masks part of the differential, whereas the impact of contract type on health is limited. In contrast, the difference in employer support during illness is a significant cause of the heightened DI risk of temporary workers, especially in slack labour markets. We therefore conclude that, conditional on being ill, workers with fixed-term contracts face different support structures and incentives that make them more likely to ultimately apply for and be awarded DI.

Suggested Citation

  • Koning, Pierre & Muller, Paul & Prudon, Roger, 2025. "Why does temporary work increase disability insurance inflow?," Labour Economics, Elsevier, vol. 96(C).
    • Handle: RePEc:eee:labeco:v:96:y:2025:i:c:s0927537125000466
    DOI: 10.1016/j.labeco.2025.102719
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    Keywords

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    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • I1 - Health, Education, and Welfare - - Health
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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