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Financial Work Incentives for Disability Benefit Recipients: Lessons from a Randomised Field Experiment

Author

Listed:
  • Bütler, Monika

    () (University of St. Gallen)

  • Deuchert, Eva

    () (University of St. Gallen)

  • Lechner, Michael

    () (University of St. Gallen)

  • Staubli, Stefan

    () (University of Calgary)

  • Thiemann, Petra

    () (Lund University)

Abstract

Disability insurance (DI) beneficiaries lose part of their benefits if their earnings exceed certain thresholds (“cash-cliffs”). This implicit taxation is considered the prime reason for low DI outflow. We analyse a conditional cash program that incentivises work related reductions of disability benefits in Switzerland. 4,000 randomly selected DI recipients receive an offer to claim up to CHF 72,000 (USD 71,000) if they expand work hours and reduce benefits. Initial reactions to the program announcement, measured by call-back rates, are modest; individuals at cash-cliffs react more frequently. By the end of the field phase, the take-up rate amounts to only 0.5%.

Suggested Citation

  • Bütler, Monika & Deuchert, Eva & Lechner, Michael & Staubli, Stefan & Thiemann, Petra, 2014. "Financial Work Incentives for Disability Benefit Recipients: Lessons from a Randomised Field Experiment," IZA Discussion Papers 8715, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp8715
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    References listed on IDEAS

    as
    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. Arie Kapteyn & James P. Smith & Arthur van Soest, 2009. "Work Disability, Work, and Justification Bias in Europe and the U.S," NBER Working Papers 15245, National Bureau of Economic Research, Inc.
    3. Beshears, John & Choi, James J. & Laibson, David & Madrian, Brigitte C., 2008. "How are preferences revealed?," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1787-1794, August.
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    5. Emmanuel Saez, 2010. "Do Taxpayers Bunch at Kink Points?," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 180-212, August.
    6. Hamish Low & Luigi Pistaferri, 2010. "Disability Risk, Disability Insurance and Life Cycle Behavior," NBER Working Papers 15962, National Bureau of Economic Research, Inc.
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    8. 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.
    9. David Stapleton & Gina Livermore & Criag Thornton & Bonnie O'Day & Robert Weathers & Krista Harrison & So O'Neil & Emily Sama Martin & David Wittenburg & Debra Wright, "undated". "Ticket to Work at the Crossroads: A Solid Foundation with an Uncertain Future," Mathematica Policy Research Reports 700b9069e84340a3a705d1509, Mathematica Policy Research.
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    12. 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.
    13. Monika Bütler & Lukas Inderbitzin & Jonathan F. Schulz & Stefan Staubli, 2012. "Die Auswirkungen bedarfsabhängiger Leistungen: Ergänzungsleistungen in der Schweiz," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 13(3), pages 179-195, August.
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    19. Robert R. Weathers II & Jeffrey Hemmeter, 2011. "The impact of changing financial work incentives on the earnings of Social Security Disability Insurance (SSDI) beneficiaries," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 30(4), pages 708-728, September.
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    Citations

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    Cited by:

    1. Koning, Pierre & van Sonsbeek, Jan-Maarten, 2017. "Making disability work? The effects of financial incentives on partially disabled workers," Labour Economics, Elsevier, vol. 47(C), pages 202-215.
    2. Eugster, Beatrix & Deuchert, Eva, 2017. "Income and Substitution Effects of a Disability Insurance Reform," Economics Working Paper Series 1709, University of St. Gallen, School of Economics and Political Science.
    3. Deuchert, E. & Eugster, B., 2016. "Crawling Up the Cash Cliff? Behavioral Responses to a Disability Insurance Reform," Health, Econometrics and Data Group (HEDG) Working Papers 16/21, HEDG, c/o Department of Economics, University of York.
    4. repec:wfo:wstudy:58794 is not listed on IDEAS
    5. Andersson, Josefine, 2018. "Financial incentives to work for disability insurance recipients - Sweden’s special rules for continuous deduction," Working Paper Series 2018:7, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    6. Liebert, Helge, 2015. "Medical Screening and Award Errors in Disability Insurance," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113224, Verein für Socialpolitik / German Economic Association.
    7. Hagen, Tobias, 2016. "Econometric Evaluation of a Placement Coaching Program for Recipients of Disability Insurance Benefits in Switzerland," Annual Conference 2016 (Augsburg): Demographic Change 145736, Verein für Socialpolitik / German Economic Association.
    8. Hagen, Tobias, 2016. "Econometric evaluation of a placement coaching program for recipients of disability insurance benefits in Switzerland," Working Paper Series: Business and Law 10, Frankfurt University of Applied Sciences, Faculty of Business and Law.

    More about this item

    Keywords

    financial incentive; field experiment; disability insurance; return-to-work;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation

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