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Local Labor Demand and Participation in Social Insurance Programs

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  • Andersen, Asbjørn Goul

    (Ragnar Frisch Centre for Economic Research)

  • Markussen, Simen

    (Ragnar Frisch Centre for Economic Research)

  • Røed, Knut

    (Ragnar Frisch Centre for Economic Research)

Abstract

Based on administrative data from Norway, we explore the "grey area" between the roles of unemployment- and temporary disability-insurances by examining how participation in these two program types is affected by local labor demand conditions. Local labor demand is identified by means of a shift-share instrumental variables strategy, where initial local industry-composition is interacted with sub-sequent national industry-specific employment fluctuations. Our results indicate that local labor demand has a large negative effect on the propensity to claim disability insurance, which, for some groups, is remarkably similar to its effect on the propensity to claim unemployment insurance. Based on this finding, we question whether it is meaningful to maintain a sharp distinction between these two programs.

Suggested Citation

  • Andersen, Asbjørn Goul & Markussen, Simen & Røed, Knut, 2019. "Local Labor Demand and Participation in Social Insurance Programs," IZA Discussion Papers 12669, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12669
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    Cited by:

    1. Mikhail Golosov & Luigi Iovino, 2021. "Social Insurance, Information Revelation, and Lack of Commitment," Journal of Political Economy, University of Chicago Press, vol. 129(9), pages 2629-2665.
    2. De Brouwer, Octave & Leduc, Elisabeth & Tojerow, Ilan, 2023. "The consequences of job search monitoring for the long-term unemployed: Disability instead of employment?," Journal of Public Economics, Elsevier, vol. 224(C).
    3. De Brouwer, Octave & Tojerow, Ilan, 2023. "The Growth of Disability Insurance in Belgium: Determinants and Policy Implications," IZA Discussion Papers 16376, Institute of Labor Economics (IZA).
    4. Cetin, Sefane & Hindriks, Jean, 2023. "Sustainability of pension reforms: An EU-wide political stress," LIDAM Discussion Papers CORE 2023016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Márton Csilalg & Lili Márk, 2023. "The Incentive Effects of Sickness Benefit for the Unemployed – Analysis of a Reduction in Potential Benefit Duration," CERS-IE WORKING PAPERS 2317, Institute of Economics, Centre for Economic and Regional Studies.

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    More about this item

    Keywords

    shift-share analysis; program substitution; disability insurance; unemployment;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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