Disability Risk, Disability Insurance and Life Cycle Behavior
نویسندگان
چکیده
We provide a framework for understanding how disability risk and features of the disability insurance program in the US affect individual consumption and labor supply behavior in an explicit life-cycle setting. We decompose earnings risk into disability shocks (that reduce the ability to work) and shocks to general productivity. We identify structural parameters of the model using indirect inference and longitudinal data on consumption, disability status, disability insurance receipt, and earnings. We use our model to evaluate both the insurance benefit and the incentive effects of various program changes: (a) Increasing the “strictness” of the disability test; (b) Changing the probability of re-assessment for DI; (c) Changing the progressivity of DI payments, and (d) Reducing means-tested benefits that provide a consumption floor to DI applicants. We show that increasing the strictness of screening would increase welfare. PRELIMINARY AND INCOMPLETE
منابع مشابه
Disability risk, disability insurance and life cycle behaviour
This paper provides a life-cycle framework for weighing up the insurance value of disability bene ts agains the incentive cost. Within this framework, we estimate the life-cycle risks that individuals face in the US, as well as the parameters governing the disability insurance program, using indirect inference and longitudinal data on consumption, disability status, disability insurance receipt...
متن کاملDisability Insurance and the Dynamics of the Incentive Insurance Trade-Off.
We provide a life-cycle framework for comparing insurance and disincentive effects of disability benefits. The risks that individuals face and the parameters of the Disability Insurance (DI ) program are estimated from consumption, health, disability insurance, and wage data. We characterize the effects of disability insurance and study how policy reforms impact behavior and welfare. DI feature...
متن کاملDisability insurance: can underwriting criteria for the self-employed be based on predictors used for disability amongst employees?
OBJECTIVE This study aims to trace risk factors for disability amongst the self-employed. Knowledge about these risk factors can contribute to more evidence-based underwriting criteria for disability insurance. BACKGROUND The trend towards privatization of social disability services in certain insurance markets creates a need to consider the appropriateness of underwriting criteria in applica...
متن کاملDisability Risk and the Value of Disability Insurance∗
We provide a lifecycle framework for comparing the insurance value of disability benefits and the incentive cost. We estimate the risks that individuals face and the parameters governing the disability insurance program using longitudinal US data on consumption, health, disability insurance, and wages. We characterize the economic effects of disability insurance and study how policy reforms imp...
متن کامل