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Social Interaction Effects in Disability Pension Participation: Evidence from Plant Downsizing

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  • Rege, Mari

    () (University of Stavanger)

  • Telle, Kjetil

    (Statistics Norway)

  • Votruba, Mark

    (Case Western Reserve University)

Abstract

We estimate the magnitude of social interaction effects in disability pension participation among older workers in Norway. Specifically, we investigate how a worker's propensity to draw disability benefits is affected by a plausibly exogenous shock to the disability entry rate of similarly-aged workers in his or her neighborhood. The problem of omitted variable bias is addressed by employing a novel instrumental variable (IV) strategy, using plant downsizing at neighbors' plants of employment as an instrument for the disability entry rate among one's previously employed neighbors. Our IV estimates suggest that a one percentage point increase in the participation rate of previously employed neighbors increased the subsequent 4-year entry rate of workers by about one-half a percentage point. Numerous robustness and specification tests appear to support the validity of the identifying assumption in our IV strategy.
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Suggested Citation

  • Rege, Mari & Telle, Kjetil & Votruba, Mark, 2009. "Social Interaction Effects in Disability Pension Participation: Evidence from Plant Downsizing," UiS Working Papers in Economics and Finance 2009/30, University of Stavanger.
  • Handle: RePEc:hhs:stavef:2009_030
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    Cited by:

    1. Gordon B. Dahl & Katrine V. L?ken & Magne Mogstad, 2014. "Peer Effects in Program Participation," American Economic Review, American Economic Association, vol. 104(7), pages 2049-2074, July.
    2. Simen Markussen & Knut Røed, 2015. "Social Insurance Networks," Journal of Human Resources, University of Wisconsin Press, vol. 50(4), pages 1081-1113.
    3. Sergi Jiménez-Martín & Arnau Juanmarti Mestres & Judit Vall Castelló, 2016. "Great Recession and disability insurance in Spain," Economics Working Papers 1519, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2017.
    4. Sergi Jiménez-Martín & Arnau Juanmarti Mestres & Judit Vall-Castello, 2016. "Great Recession and Disability in Spain," Working Papers 896, Barcelona Graduate School of Economics.
    5. Torbjørn Hægeland & Dag Rønningen & Kjell G. Salvanes, 2007. "Adapt or withdraw? Evidence on technological changes and early retirement using matched worker-firm data," Discussion Papers 509, Statistics Norway, Research Department.
    6. Glitz, Albrecht, 2017. "Coworker networks in the labour market," Labour Economics, Elsevier, vol. 44(C), pages 218-230.
    7. Clara Welteke, 2015. "Peers at Work - a Brief Overview of the Literature on Peer Effects at the Workplace and the Policy Implications," DIW Roundup: Politik im Fokus 68, DIW Berlin, German Institute for Economic Research.
    8. Lawrence E. Blume & William A. Brock & Steven N. Durlauf & Rajshri Jayaraman, 2015. "Linear Social Interactions Models," Journal of Political Economy, University of Chicago Press, vol. 123(2), pages 444-496.
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    10. Bratberg, Espen & Monstad, Karin, 2015. "Worried sick? Worker responses to a financial shock," Labour Economics, Elsevier, vol. 33(C), pages 111-120.
    11. Espen Bratberg & Øivind Anti Nilsen & Kjell Vaage, 2012. "Is Recipiency of Disability Pension Hereditary?," CESifo Working Paper Series 3796, CESifo Group Munich.
    12. Qingyan Shang, 2014. "Endogenous neighborhood effects on welfare participation," Empirical Economics, Springer, vol. 47(2), pages 639-667, September.
    13. Simen Markussen & Knut Røed, 2016. "Leaving Poverty Behind? The Effects of Generous Income Support Paired with Activation," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 180-211, February.
    14. Venke Furre Haaland & Kjetil Telle, 2013. "Pro-cyclical mortality. Evidence from Norway," Discussion Papers 766, Statistics Norway, Research Department.
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    16. Julie Janssens & Natascha Van Mechelen, 2017. "Who is to Blame? An Overview of the Factors Contributing to the Non-Take-Up of Social Rights," Working Papers 1708, Herman Deleeck Centre for Social Policy, University of Antwerp.
    17. Ethan Cohen-Cole & Giulio Zanella, 2008. "Welfare Stigma or Information Sharing? Decomposing Social Interactions Effects in Social Benefit Use," Department of Economics University of Siena 531, Department of Economics, University of Siena.
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    More about this item

    Keywords

    disability; downsizing; layoffs; plant closing; social insurance; social interaction; welfare norms;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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