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Disabillity Pension Motivated Income Adjustment


  • Holen , Dag S.

    (Ragnar Frisch Centre for Economic Research)


One element of the Norwegian disability pension system makes the extent to which pension responds to changes in income in the last three years before disablement vary over different income profiles. This special feature is explored in order to identify an individual specific pension incentive for income adjustment. If disability is foreseen, this feature implies that there is a motive for increasing income in the years before disablement and through this increase pensions. Analysis on register data for all persons receiving disability pension 1992-2001 shows that the possibility to affect pensions increases income, indicating that disability to some extent is foreseen and that individuals strategically adjust their income in order to increase their pensions.

Suggested Citation

  • Holen , Dag S., 2007. "Disabillity Pension Motivated Income Adjustment," Memorandum 17/2008, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2008_017

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    References listed on IDEAS

    1. Bratberg, Espen, 1999. " Disability Retirement in a Welfare State," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(1), pages 97-114, March.
    2. Robert Haveman & Philip de Jong & Barbara Wolfe, 1991. "Disability Transfers and the Work Decision of Older Men," The Quarterly Journal of Economics, Oxford University Press, vol. 106(3), pages 939-949.
    3. Mari Rege & Kjetil Telle & Mark Votruba, 2009. "The Effect of Plant Downsizing on Disability Pension Utilization," Journal of the European Economic Association, MIT Press, vol. 7(4), pages 754-785, June.
    4. Mikhail Golosov & Aleh Tsyvinski, 2006. "Designing Optimal Disability Insurance: A Case for Asset Testing," Journal of Political Economy, University of Chicago Press, vol. 114(2), pages 257-279, April.
    5. Holen, Dag S., 2007. "Pension Incentives, Labor Supply and Heterogeneous Pension Systems," Memorandum 18/2008, Oslo University, Department of Economics.
    6. Jonathan Gruber, 2000. "Disability Insurance Benefits and Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1162-1183, December.
    7. Diamond, P. A. & Mirrlees, J. A., 1978. "A model of social insurance with variable retirement," Journal of Public Economics, Elsevier, vol. 10(3), pages 295-336, December.
    8. Diamond, Peter & Sheshinski, Eytan, 1995. "Economic aspects of optimal disability benefits," Journal of Public Economics, Elsevier, vol. 57(1), pages 1-23, May.
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    More about this item


    Disability pension; Income adjustment;

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General


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