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Act Now: The Effects of the 2008 Spanish Disability Reform

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  • Matthew J. Hill
  • Jose Silva

    ()

  • Judit Vall

Abstract

We evaluate the effects of a reduction in the generosity of the Spanish disability system (DI) implemented in 2008. The reform reduced the benefits for individuals that have a short contributory history relative to their age, theoretically discouraging potential applicants to disability. However, due to the method used to calculate the extent of lost benefits, the reform actually introduced an incentive for individuals to apply for disability now. We use a life-cycle model with heterogeneous disabled workers to understand the potential impact of the reform and confirm the predictions of the model empirically. Our estimates show that the reform increased the probability of applying to DI by 33% for men. Consistent with the theoretical model, the effect is much stronger for individuals that lost their job in the previous period (83%).

Suggested Citation

  • Matthew J. Hill & Jose Silva & Judit Vall, 2015. "Act Now: The Effects of the 2008 Spanish Disability Reform," Studies in Economics 1512, School of Economics, University of Kent.
  • Handle: RePEc:ukc:ukcedp:1512
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    File URL: https://www.kent.ac.uk/economics/repec/1512.pdf
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    Cited by:

    1. Judit Vall Castelló, 2017. "What happens to the employment of disabled individuals when all financial disincentives to work are abolished?," Health Economics, John Wiley & Sons, Ltd., vol. 26(S2), pages 158-174, September.
    2. René Böheim & Thomas Leoni, 2016. "Disability policies: Reform strategies in a comparative perspective," NBER Working Papers 22206, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    disability benefits; life-cycle model; policy evaluation;
    All these keywords.

    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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