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Does experience rating reduce disability inflow?

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  • Kyyrä, Tomi
  • Tuomala, Juha

Abstract

This study explores whether the experience rating of employers' disability insurance premiums affects the inflow of older employees to disability benefits in Finland. To identify the causal effect of experience rating, we exploit a pension reform that extended the coverage of the experience-rated premiums. The results show that a new disability benefit claim can cause substantial cost to the former employer through an increased premium. Nonetheless, we find no evidence of the significant effects of experience rating on the disability inflow. The lack of the behavioral effects may be due to the complexity of experience rating calculations and/or limited employer awareness.

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  • Kyyrä, Tomi & Tuomala, Juha, 2013. "Does experience rating reduce disability inflow?," Working Papers 46, VATT Institute for Economic Research.
    • Handle: RePEc:fer:wpaper:46
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    File URL: https://www.doria.fi/handle/10024/148785
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    Cited by:

    1. Koning, Pierre & Muller, Paul & Prudon, Roger, 2022. "Why Do Temporary Workers Have Higher Disability Insurance Risks Than Permanent Workers?," IZA Discussion Papers 15173, Institute of Labor Economics (IZA).
    2. Wolter H.J. Hassink & Pierre Koning & Wim Zwinkels, 2015. "Employers Opting Out of Public Disability Insurance: Selection or Incentive Effects?," Tinbergen Institute Discussion Papers 15-081/V, Tinbergen Institute.
    3. Kyyrä, Tomi & Tuomala, Juha, 2023. "The effects of employers’ disability and unemployment insurance costs on benefit inflows," Labour Economics, Elsevier, vol. 85(C).
    4. Pierre Koning, 2016. "Privatizing sick pay: Does it work?," IZA World of Labor, Institute of Labor Economics (IZA), pages 324-324, December.
    5. Christine Mayrhuber & Silvia Rocha-Akis, 2013. "Anreizsysteme zur Weiterbeschäftigung älterer Arbeitnehmerinnen und Arbeitnehmer," WIFO Studies, WIFO, number 46905, March.
    6. Ulrike Famira-Mühlberger & Ulrike Huemer & Christine Mayrhuber, 2015. "Die Beschäftigungsquote Älterer im europäischen Vergleich," WIFO Studies, WIFO, number 58532, March.
    7. Hassink Wolter H.J. & Koning Pierre & Zwinkels Wim, 2018. "Do Firms with Low Disability Risks Opt Out from Public to Private Insurance?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 18(1), pages 1-11, January.

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    More about this item

    Keywords

    Experience rating; disability insurance; early retirement; Labour market; Työmarkkinat; Social security; Sosiaaliturva; Labor market and policies promoting economic growth; Työmarkkinat ja kasvua tukeva politiikka; H320 - Fiscal Policies and Behavior of Economic Agents: Firm; J140 - Economics of the Elderly; Economics of the Handicapped; J160 - Economics of Gender; Non-labor Discrimination;
    All these keywords.

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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