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Great Recession and Disability Insurance in Spain

Author

Listed:
  • Sergi Jiménez-Martín
  • Arnau Juanmarti Mestres
  • Judit Vall Castelló

Abstract

In this paper, we exploit the strong incidence of the Great Recession in Spain to estimate the effect of economic conditions on participation in Disability Insurance (DI). Using individual panel data, we show that increases in the local unemployment rate are associated with a reduction in the individual probability to enter the DI program during the Great Recession in Spain. Using aggregate data on applications, we show that this procyclical behavior of DI awards comes from an increase in the proportion of applications that are denied. Thus, contrary to the previous literature that has extensively reported a countercyclical behavior of DI participation, our results provide new evidence that, in periods of extremely recessionary conditions, DI participation may turn procyclical.

Suggested Citation

  • Sergi Jiménez-Martín & Arnau Juanmarti Mestres & Judit Vall Castelló, 2017. "Great Recession and Disability Insurance in Spain," Working Papers 2017-08, FEDEA.
  • Handle: RePEc:fda:fdaddt:2017-08
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    References listed on IDEAS

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    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, July.
    2. HJ Smoluk & Bruce H. Andrews, 2009. "Group Long-Term Disability Insurance Claims and the Business Cycle," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 32(2), pages 154-172.
    3. Halpern, Janice & Hausman, Jerry A., 1986. "Choice under uncertainty: A model of applications for the social security disability insurance program," Journal of Public Economics, Elsevier, vol. 31(2), pages 131-161, November.
    4. Richard Burkhauser & Mary Daly & Duncan McVicar & Roger Wilkins, 2014. "Disability benefit growth and disability reform in the US: lessons from other OECD nations," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-30, December.
    5. Dan Black & Kermit Daniel & Seth Sanders, 2002. "The Impact of Economic Conditions on Participation in Disability Programs: Evidence from the Coal Boom and Bust," American Economic Review, American Economic Association, vol. 92(1), pages 27-50, March.
    6. Mari Rege & Kjetil Telle & Mark Votruba, 2012. "Social Interaction Effects in Disability Pension Participation: Evidence from Plant Downsizing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(4), pages 1208-1239, December.
    7. 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.
    8. David H. Autor & Mark G. Duggan, 2003. "The Rise in the Disability Rolls and the Decline in Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 157-206.
    9. Marie, Olivier & Vall Castello, Judit, 2012. "Measuring the (income) effect of disability insurance generosity on labour market participation," Journal of Public Economics, Elsevier, vol. 96(1), pages 198-210.
    10. Ossi Korkeamäki & Tomi Kyyrä, 2012. "Institutional rules, labour demand and retirement through disability programme participation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(2), pages 439-468, January.
    11. Norma B. Coe & Matthew S. Rutledge, 2013. "How Does the Composition of Disability Insurance Applicants Change Across Business Cycles?," Working Papers, Center for Retirement Research at Boston College wp2013-5, Center for Retirement Research.
    12. Sergi Jiménez-Martín & José M. Labeaga & Cristina Vilaplana Prieto, 2006. "Award errors and permanent disability benefits in Spain," Economics Working Papers 966, Department of Economics and Business, Universitat Pompeu Fabra.
    13. Nicole Maestas & Kathleen J. Mullen & Alexander Strand, 2013. "Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt," American Economic Review, American Economic Association, vol. 103(5), pages 1797-1829, August.
    14. repec:aei:rpbook:24945 is not listed on IDEAS
    15. Bratsberg, Bernt & Fevang, Elisabeth & Røed, Knut, 2013. "Job loss and disability insurance," Labour Economics, Elsevier, vol. 24(C), pages 137-150.
    16. Duncan McVicar, 2006. "Why do disability benefit rolls vary between regions? A review of the evidence from the USA and the UK," Regional Studies, Taylor & Francis Journals, vol. 40(5), pages 519-533.
    17. Richard Burkhauser & Mary C. Daly, 2011. "The Declining Work and Welfare of People with Disabilities," Books, American Enterprise Institute, number 7631.
    18. Disney, Richard & Webb, Steven, 1991. "Why Are There So Many Long Term Sick in Britain?," Economic Journal, Royal Economic Society, vol. 101(405), pages 252-262, March.
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    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I10 - Health, Education, and Welfare - - Health - - - General
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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