Disability Benefits, Consumption Insurance, and Household Labor Supply

David Autor, Andreas Ravndal Kostol, Magne Mogstad, Bradley Setzler

NBER Working Paper No. 23466
Issued in June 2017, Revised in August 2018
NBER Program(s):Aging, Labor Studies, Public Economics

There is no evaluation of the consequences of Disability Insurance (DI) receipt that captures the effects on households' net income and consumption expenditure, family labor supply, or benefits from other programs. Combining detailed register data from Norway with an instrumental variables approach based on random assignment to appellant judges, we comprehensively assess how DI receipt affects these understudied outcomes. To consider the welfare implications of the findings from this instrumental variables approach, we estimate a dynamic model of household behavior that translates employment, reapplication and savings decisions into revealed preferences for leisure and consumption. The model-based results suggest that on average, the willingness to pay for DI receipt is positive and sizable. Because spousal labor supply strongly buffers the household income and consumption effects of DI allowances, the estimated willingness to pay for DI receipt is smaller for married than single applicants.

You may purchase this paper on-line in .pdf format from ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.


The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w23466

Users who downloaded this paper also downloaded* these:
Garrett, Ordin, Roberts, and Suárez Serrato w23473 Tax Advantages and Imperfect Competition in Auctions for Municipal Bonds
Deshpande and Li w23472 Who Is Screened Out? Application Costs and the Targeting of Disability Programs
García, Heckman, Leaf, and Prados w23479 Quantifying the Life-cycle Benefits of a Prototypical Early Childhood Program
Milligan and Schirle w23405 Push and Pull: Disability Insurance, Regional Labor Markets, and Benefit Generosity in Canada and the United States
Athey, Catalini, and Tucker w23488 The Digital Privacy Paradox: Small Money, Small Costs, Small Talk
NBER Videos

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

Contact Us