Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/254261 
Year of Publication: 
2022
Series/Report no.: 
IFS Working paper No. W22/11
Publisher: 
Institute for Fiscal Studies (IFS), London
Abstract: 
This paper uses a life cycle model to study the welfare implications of reforms to U.S. Disability Insurance (DI) while accounting for household self-insurance. In addition to crowding out the insurance value of DI, household self-insurance may drive negative selection into DI by reducing implicit application costs. Allowing for such interactions, I find that expansionary DI reforms do not necessarily improve welfare. However, an asset test reduces negative selection and improves the welfare effects of DI expansions. Household self-insurance crowds out the value of DI expansions, but abstracting away from insurance value can deliver erroneous policy recommendations.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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