Intergenerational Spillovers in Disability Insurance

Gordon B. Dahl, Anne C. Gielen

NBER Working Paper No. 24296
Issued in February 2018
NBER Program(s):Children, Labor Studies, Public Economics

Does participation in a social assistance program by parents have spillovers on their children's own participation, future labor market attachment, and human capital investments? While intergenerational concerns have figured prominently in policy debates for decades, causal evidence is scarce due to nonrandom participation and data limitations. In this paper we exploit a 1993 policy reform in the Netherlands which tightened disability insurance (DI) criteria for existing claimants, and use rich panel data to link parents to children's long-run outcomes. The key to our regression discontinuity design is that the reform applied to younger cohorts, while older cohorts were exempted from the new rules. We find that children of parents who were pushed out of DI or had their benefits reduced are 11% less likely to participate in DI themselves, do not alter their use of other government safety net programs, and earn 2% more in the labor market as adults. The combination of reduced government transfers and increased tax revenue results in a fiscal gain of 5,900 euros per treated parent due to child spillovers by 2014. Moreover, children of treated parents complete an extra 0.12 years of schooling on average, an investment consistent with an anticipated future with less reliance on DI. Our findings have important implications for the evaluation of this and other policy reforms: ignoring parent-to-child spillovers understates the long-run cost savings of the Dutch reform by between 21 and 40% in present discounted value terms.

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.


Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w24296

Users who downloaded this paper also downloaded* these:
Eggertsson, Robbins, and Wold w24287 Kaldor and Piketty’s Facts: The Rise of Monopoly Power in the United States
Parker and Vogl w24303 Do Conditional Cash Transfers Improve Economic Outcomes in the Next Generation? Evidence from Mexico
Kuka, Shenhav, and Shih w24315 Do Human Capital Decisions Respond to the Returns to Education? Evidence from DACA
Abadie, Athey, Imbens, and Wooldridge w24003 When Should You Adjust Standard Errors for Clustering?
Goodman w20221 Flaking Out: Student Absences and Snow Days as Disruptions of Instructional Time
NBER Videos

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

Contact Us