Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/338919 
Year of Publication: 
2026
Series/Report no.: 
DIW Discussion Papers No. 2157
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
In 2001, Germany abolished public occupational disability insurance (ODI)-the second tier of its public DI system-for cohorts born after 1960. Using administrative data, we first document that, in the long run, overall DI inflows declined by roughly one-third. Second, using representative survey data, we document at best modest ODI insurance take-up responses in the private individual, risk-rated market, which lacks guaranteed issue. Third, an equilibrium model incorporating interactions between the public safety net, the first-tier public DI, and the private market reveals that coverage denials and weak insurance demand, driven by complementary social insurance, can explain the modest private ODI take-up response. Coverage gradients by income and health are thus substantial. Finally, counterfactual simulations highlight the limited scope of incremental reforms.
Subjects: 
occupational disability insurance
individual private DI
coverage denials
risk rating
private information
adverse selection
social safety net
JEL: 
D14
D82
H53
H55
I14
I18
I38
J14
J26
Document Type: 
Working Paper

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