Fundamentally Reforming the DI System: Evidence from German Notch Cohorts
In 2001, Germany abolished public occupational disability insurance (ODI)—the second tier of public DI—for post-1960 cohorts. First, overall DI inflows decreased by a third in the long run. Second, representative data show at best modest increases in private ODI take-up in an individual risk-rated market without guaranteed issue. Third, an equilibrium model featuring interactions between the safety net, the first tier of public DI, and the private market illustrates that coverage denials and weak insurance demand due to complementary social insurance produce modest private ODI take-up with steep gradients by income and health. Finally, we simulate complementary reforms.
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Copy CitationYaming Cao, Bjoern Fischer, Johannes Micha Geyer, and Nicolas R. Ziebarth, "Fundamentally Reforming the DI System: Evidence from German Notch Cohorts," NBER Working Paper 30812 (2022), https://doi.org/10.3386/w30812.Download Citation
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