NB20-08: Disability Insurance, Induced Entry, and Financial Well-Being: Evidence from Canada

Two important parameters of disability insurance (DI) programs are the level of DI benefits and the amount of earnings DI recipients can earn before benefits are deducted (the earnings disregard). Estimating the behavioral response to changes in these parameters has been difficult in the US, as individuals largely face identical program rules, making suitable counterfactuals difficult to find. This project’s goal is to estimate the causal impact of changes in both parameters in Canada, which operates distinct DI programs for Quebec and the Rest of Canada (RoC). By exploiting administrative data and policy reforms that affected only one of the two
programs, we can identify the causal effect of changes in DI benefit levels and the earnings disregard on program entry/exit, labor supply, and financial well-being.
The deliverable will be a research manuscript, produced by accomplishing the following steps:
• Develop analysis sample: Extract data from the “Longitudinal Administrative Database” and prepare a data file for the statistical analysis.
• Estimate statistical models: Conduct descriptive analysis and estimate regression models.
• Prepare final paper and non-technical report: Write up the empirical findings.