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Using a Kinked Policy Rule to Estimate the Effect of Experience Rating on Disability Inflow

Author

Listed:
  • Kyyrä, Tomi

    () (VATT, Helsinki)

  • Paukkeri, Tuuli

    () (VATT, Helsinki)

Abstract

We study whether the experience rating of employers' disability insurance premiums affects the inflow to disability benefits in Finland. To identify the causal effect of experience rating, we exploit "kinks" in the rule that specifies the degree of experience rating as a function of firm size. Using comprehensive matched employer-employee panel data, we estimate the effects of experience rating on the inflow to sickness and disability benefits. Our results suggest that experience rating has reduced the disability inflow among men under age 50. For other groups we find no significant effects, yet we cannot rule out relatively small effects.

Suggested Citation

  • Kyyrä, Tomi & Paukkeri, Tuuli, 2018. "Using a Kinked Policy Rule to Estimate the Effect of Experience Rating on Disability Inflow," IZA Discussion Papers 11409, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp11409
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    References listed on IDEAS

    as
    1. John W. Ruser, 1985. "Workers' Compensation Insurance, Experience-Rating, and Occupational Injuries," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 487-503, Winter.
    2. Petri Bockerman & Ohto Kanninen & Ilpo Suoniemi, 2014. "A Kink that Makes you Sick: the Effect of Sick Pay on Absence in a Social Insurance System," Discussion Papers 97, Aboa Centre for Economics.
    3. Bruce, Christopher J & Atkins, Frank J, 1993. "Efficiency Effects of Premium-Setting Regimes under Workers' Compensation: Canada and the United States," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 38-69, January.
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    More about this item

    Keywords

    experience rating; disability insurance; early retirement;

    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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