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

Listed author(s):
  • 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)

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%.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 8715.

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Length: 44 pages
Date of creation: Dec 2014
Handle: RePEc:iza:izadps:dp8715
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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, 02.
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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.
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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 ODay Robert R Weathers II Krista Harrison So ONeil Emily Sama Martin David Wittenburg Debra Wright, 2008. "Ticket to Work at the Crossroads A Solid Foundation with an Uncertain Future," Mathematica Policy Research Reports 700b9069e84340a3a705d1509, Mathematica Policy Research.
  10. 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.
  11. Annemiek Vuren & Daniel Vuuren, 2007. "Financial Incentives in Disability Insurance in the Netherlands," De Economist, Springer, vol. 155(1), pages 73-98, March.
  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, 08.
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  24. repec:mpr:mprres:3883 is not listed on IDEAS
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