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Evaluating the Impact of a Reduction in the Generosity of Disability Benefits: The 2008 Spanish Reform

Author

Listed:
  • Silva, José I.

    () (University of Kent)

  • Vall-Castello, Judit

    () (Universitat Pompeu Fabra)

Abstract

We evaluate the effects of a reduction in the generosity of disability benefits in Spain that occurred in 2008. The main objective of the reform was to reduce the amount of benefits for individuals that do not have a long contributory history as the reform introduced a disincentive to apply to the system if the individual does not have 35 years of effective contributions. Theoretical insights are gained with a life-cycle model with heterogeneous disabled workers. The model's simulations predict a reduction in the incentives to apply for disability benefits for partially disabled individuals who do not reach the 35 years of contributions. Diff-in-diff estimates are consistent with our model predictions.

Suggested Citation

  • Silva, José I. & Vall-Castello, Judit, 2012. "Evaluating the Impact of a Reduction in the Generosity of Disability Benefits: The 2008 Spanish Reform," IZA Discussion Papers 6482, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6482
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    References listed on IDEAS

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    1. Philip de Jong & Maarten Lindeboom & Bas van der Klaauw, 2011. "Screening Disability Insurance Applications," Journal of the European Economic Association, European Economic Association, vol. 9(1), pages 106-129, February.
    2. Chen, Susan & van der Klaauw, Wilbert, 2008. "The work disincentive effects of the disability insurance program in the 1990s," Journal of Econometrics, Elsevier, pages 757-784.
    3. Marie, Olivier & Vall Castello, Judit, 2012. "Measuring the (income) effect of disability insurance generosity on labour market participation," Journal of Public Economics, Elsevier, vol. 96(1), pages 198-210.
    4. Silva, José I. & Vall-Castello, Judit, 2012. "Why Are So Many Disabled Individuals Not Working in Spain? A Job Search Approach," IZA Discussion Papers 6317, Institute for the Study of Labor (IZA).
    5. Campolieti, Michele & Riddell, Chris, 2012. "Disability policy and the labor market: Evidence from a natural experiment in Canada, 1998–2006," Journal of Public Economics, Elsevier, vol. 96(3), pages 306-316.
    6. Karlström, Anders & Palme, Mårten & Svensson, Ingemar, 2008. "The employment effect of stricter rules for eligibility for DI: Evidence from a natural experiment in Sweden," Journal of Public Economics, Elsevier, pages 2071-2082.
    7. Staubli, Stefan, 2011. "The impact of stricter criteria for disability insurance on labor force participation," Journal of Public Economics, Elsevier, vol. 95(9-10), pages 1223-1235, October.
    8. Sergi Jiménez Martín & Judit Vall Castello, 2009. "Business Cycle Effects on Labour Force Transitions for Older People in Spain," Working Papers 2009-25, FEDEA.
    9. Gruber, Jonathan & Kubik, Jeffrey D., 1997. "Disability insurance rejection rates and the labor supply of older workers," Journal of Public Economics, Elsevier, vol. 64(1), pages 1-23, April.
    10. Jonathan Gruber, 2000. "Disability Insurance Benefits and Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1162-1183, December.
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    Cited by:

    1. Christian Dudel, 2017. "Expanding the Markov chain tool box: distributions of occupation times and waiting times," MPIDR Working Papers WP-2017-017, Max Planck Institute for Demographic Research, Rostock, Germany.

    More about this item

    Keywords

    disability benefits reform; life-cycle model; policy evaluation;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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