NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

Can helping the sick hurt the able? Incentives, information and disruption in a disability-related welfare reform

Nitika Bagaria, Barbara Petrongolo, John Van Reenen

NBER Working Paper No. 21163
Issued in May 2015
NBER Program(s):Labor Studies

Disability rolls have escalated in developed nations over the last 40 years. The UK, however, stands out because the numbers on these benefits stopped rising when a welfare reform was introduced that integrated disability benefits with unemployment insurance (UI). This policy reform improved job information and sharpened bureaucratic incentives to find jobs for the disabled (relative to those on UI). We exploit the fact that policy was rolled-out quasi-randomly across geographical areas. In the long-run the policy improved the outflows from disability benefits by 6% and had an (insignificant) 1% increase in unemployment outflows. This is consistent with a model where information helps both groups, but bureaucrats were given incentives to shift effort towards helping the disabled find jobs and away from helping the unemployed. Interestingly, in the short-run the policy had a negative impact for both groups, suggesting important disruption effects. We estimate that it takes about six years for the estimated benefits of the reform to exceed its costs, which is beyond the time horizon of most policy-makers.

download in pdf format
   (7500 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w21163

Users who downloaded this paper also downloaded* these:
Autor, Duggan, Greenberg, and Lyle w21144 The Impact of Disability Benefits on Labor Supply: Evidence from the VA's Disability Compensation Program
Beshears, Choi, Hurwitz, Laibson, and Madrian w21168 Liquidity in Retirement Savings Systems: An International Comparison
Buera, Kaboski, and Rogerson w21165 Skill Biased Structural Change
Hong and McLaren w21123 Are Immigrants a Shot in the Arm for the Local Economy?
Dix-Carneiro and Kovak w20912 Trade Liberalization and the Skill Premium: A Local Labor Markets Approach
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us