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Getting Disabled Workers Back to Work: How Important Are Economic Incentives?

  • Fevang, Elisabeth

    ()

    (Ragnar Frisch Centre for Economic Research)

  • Hardoy, Inés

    ()

    (Institute for Social Research, Oslo)

  • Røed, Knut

    ()

    (Ragnar Frisch Centre for Economic Research)

We investigate the impacts of economic incentives on the duration and outcome of temporary disability insurance (TDI) spells. The analysis is based on a large quasi-experiment in Norway, with a complete overhaul of the TDI benefit system. Our findings show that the labor supply of TDI claimants responds to both the benefit-level and to the level of local labor demand. The estimated elasticity of the employment hazard with respect to the benefit-level is – 0.3. We also find that the level of TDI benefits significantly affects the transition rate to alternative social insurance programs such as permanent disability and unemployment.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7137.

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Length: 32 pages
Date of creation: Jan 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7137
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  2. Markussen, Simen & Røed, Knut & Røgeberg, Ole J. & Gaure, Simen, 2011. "The anatomy of absenteeism," Journal of Health Economics, Elsevier, vol. 30(2), pages 277-292, March.
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  8. Card, David & Chetty, Raj & Weber, Andrea, 2007. "The Spike at Benefit Exhaustion: Leaving the Unemployment System or Starting a New Job?," IZA Discussion Papers 2590, Institute for the Study of Labor (IZA).
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  15. Knut Røed & Peter Jensen & Anna Thoursie, 2008. "Unemployment duration and unemployment insurance: a comparative analysis based on Scandinavian micro data," Oxford Economic Papers, Oxford University Press, vol. 60(2), pages 254-274, April.
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