NB21-10: The Long-Term Externalities of Short-Term Disability Insurance

This project examines the effect of employer-provided short-term disability insurance on the subsequent take-up of publicly provided long-term disability insurance. One possibility is that short-term DI allows workers to retain employment through an initial health event, thereby facilitating their return-to-work. The alternative possibility is that short-term DI lowers the cost of the waiting period for long-term DI, thereby encouraging applications for long-term disability benefits. We are constructing an administrative database of workers in Canada that will enable us to compare the impact on long-term DI applications when an employer starts or terminates a short-term DI program.