EconStor >
Institute for Fiscal Studies (IFS), London >
IFS Working Papers, Institute for Fiscal Studies (IFS) >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/47502
  
Title:Disability risk, disability insurance and life cycle behavior PDF Logo
Authors:Low, Hamish
Pistaferri, Luigi
Issue Date:2010
Series/Report no.:IFS working papers 10,11
Abstract:This paper provides a life-cycle framework for weighing up the insurance value of disability benefi ts against the incentive cost. Within this framework, we estimate the life-cycle risks that individuals face in the US, as well as the parameters governing the disability insurance program, using indirect inference and longitudinal data on consumption, disability status, disability insurance receipt, and wages. We use our estimates to characterize the effectiveness of the disability insurance program and to consider the e ffect on welfare and behaviour of policy reform. High levels of false rejections associated with the screening process imply welfare increases as the program becomes less strict, despite the worsening incentives that this implies. Incentives for false applications are reduced by reducing generosity and increasing reassessments and these improve welfare, despite the worse insurance implied.
Subjects:Disability
social security
savings behavior
wage risk
JEL:D91
H53
H55
J26
Document Type:Working Paper
Appears in Collections:IFS Working Papers, Institute for Fiscal Studies (IFS)

Files in This Item:
File Description SizeFormat
626248914.pdf1.39 MBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/47502

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.