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Great Recession and disability insurance in Spain

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In this paper, we exploit the strong incidence of the Great Recession in Spain to estimate the effect of economic conditions on participation in Disability Insurance (DI). Using individual panel data, we show that increases in the local unemployment rate are associated with a reduction in the individual probability to enter the DI program during the Great Recession in Spain. Using aggregate data on applications, we show that this procyclical behavior of DI awards comes from an increase in the proportion of applications that are denied. Thus, contrary to the previous literature that has extensively reported a countercyclical behavior of DI participation, our results provide new evidence that, in periods of extremely recessionary conditions, DI participation may turn procyclical.

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  • Sergi Jiménez-Martín & Arnau Juanmarti Mestres & Judit Vall Castelló, 2016. "Great Recession and disability insurance in Spain," Economics Working Papers 1519, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2017.
  • Handle: RePEc:upf:upfgen:1519
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    1. Sergi Jiménez-Martín & Arnau Juanmarti Mestres & Judit Vall Castello, 2017. "Hiring subsidies for people with disabilities: Do they work?," Policy Papers 2017-11, FEDEA.

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    More about this item

    Keywords

    Disability; Great Recession; labour market transitions;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I10 - Health, Education, and Welfare - - Health - - - General
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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