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Disability in the Welfare State: An Unemployment Problem in Disguise?

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  • Bratsberg, Bernt

    (Ragnar Frisch Centre for Economic Research)

  • Fevang, Elisabeth

    (Ragnar Frisch Centre for Economic Research)

  • Røed, Knut

    (Ragnar Frisch Centre for Economic Research)

Abstract

Economies with low unemployment often have high disability rates. In Norway, the permanent disability insurance rolls outnumber registered unemployment by four to one. Based on administrative register data matched with firms' financial statements and closure data collected from bankruptcy proceedings, we show that a large fraction of Norwegian disability insurance claims can be directly attributed to job displacement and other adverse shocks to employment opportunities. For men, we estimate that job loss more than doubles the risk of entry to permanent disability and that displacements account for fully 28 percent of all new disability insurance claims. We conclude that unemployment and disability insurance are close substitutes.

Suggested Citation

  • Bratsberg, Bernt & Fevang, Elisabeth & Røed, Knut, 2010. "Disability in the Welfare State: An Unemployment Problem in Disguise?," IZA Discussion Papers 4897, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp4897
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    Cited by:

    1. Christoph Basten & Andreas Fagereng & Kjetil Telle, 2014. "Cash‐on‐hand and the Duration of Job Search: Quasi‐experimental Evidence from Norway," Economic Journal, Royal Economic Society, vol. 0(576), pages 540-568, May.
    2. Daiji Kawaguchi & Tetsushi Murao, 2012. "Who bears the cost of the business cycle? Labor-market institutions and volatility of the youth unemployment rate," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-22, December.
    3. Simen Markussen & Knut Røed, 2015. "Social Insurance Networks," Journal of Human Resources, University of Wisconsin Press, vol. 50(4), pages 1081-1113.
    4. Sergi Jiménez-Martín & Arnau Juanmarti Mestres & Judit Vall Castelló, 2019. "Great Recession and disability insurance in Spain," Empirical Economics, Springer, vol. 56(5), pages 1623-1645, May.
    5. Fevang, Elisabeth & Hardoy, Inés & Røed, Knut, 2013. "Getting Disabled Workers Back to Work: How Important Are Economic Incentives?," IZA Discussion Papers 7137, Institute of Labor Economics (IZA).
    6. Barth, Erling & Moene, Karl Ove, 2012. "The Equality Multiplier: How Wage Setting and Welfare Spending Make Similar Countries Diverge," IZA Discussion Papers 6494, Institute of Labor Economics (IZA).
    7. Røed, Knut, 2012. "Active Unemployment Insurance," IZA Policy Papers 41, Institute of Labor Economics (IZA).
    8. Andreas Ravndal Kostol & Magne Mogstad, 2014. "How Financial Incentives Induce Disability Insurance Recipients to Return to Work," American Economic Review, American Economic Association, vol. 104(2), pages 624-655, February.
    9. Demianova, Anna & Lukiyanova, Anna, 2016. "The impact of disability status on labor supply in Russia," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 44, pages 50-74.
    10. Nilsen, Øivind Anti & Reiso, Katrine Holm, 2011. "Scarring Effects of Unemployment," IZA Discussion Papers 6198, Institute of Labor Economics (IZA).
    11. Vestad, Ola Lotherington, 2013. "Labour supply effects of early retirement provision," Labour Economics, Elsevier, vol. 25(C), pages 98-109.
    12. Markussen, Simen & Mykletun, Arnstein & Røed, Knut, 2012. "The case for presenteeism — Evidence from Norway's sickness insurance program," Journal of Public Economics, Elsevier, vol. 96(11), pages 959-972.
    13. Rossin-Slater, Maya & Wüst, Miriam, 2018. "Parental responses to child support obligations: Evidence from administrative data," Journal of Public Economics, Elsevier, vol. 164(C), pages 183-196.
    14. Sergi Jiménez-Martín & Arnau Juanmarti Mestres & Judit Vall-Castello, 2016. "Great Recession and Disability in Spain," Working Papers 896, Barcelona School of Economics.
    15. Sigurd Mølster Galaasen, 2021. "Pension Reform Disabled," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(4), pages 1227-1260, October.
    16. Espen Bratberg & Øivind Anti Nilsen & Kjell Vaage, 2012. "Is Recipiency of Disability Pension Hereditary?," CESifo Working Paper Series 3796, CESifo.
    17. Halapuu, Vivika, 2021. "Access to education and disability insurance claims," Working Paper Series 2021:17, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    18. Ann Kristin Knudsen & Simon Øverland & Matthew Hotopf & Arnstein Mykletun, 2012. "Lost Working Years Due to Mental Disorders: An Analysis of the Norwegian Disability Pension Registry," PLOS ONE, Public Library of Science, vol. 7(8), pages 1-7, August.
    19. Milewski, Nadja & Struffolino, Emanuela & Bernardi, Laura, 2018. "Migrant Status and Lone Motherhood – Risk Factors of Female Labour Force Participation in Switzerland," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 141-163.

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    More about this item

    Keywords

    social insurance; displacement; disability; employment opportunities;
    All these keywords.

    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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