Getting Disabled Workers Back to Work: How Important Are Economic Incentives?
We investigate the impacts of economic incentives on the duration and outcome of temporary disability insurance (TDI) spells. The analysis is based on a large quasi-experiment in Norway, with a complete overhaul of the TDI benefit system. Our findings show that the labor supply of TDI claimants responds to both the benefit-level and to the level of local labor demand. The estimated elasticity of the employment hazard with respect to the benefit-level is – 0.3. We also find that the level of TDI benefits significantly affects the transition rate to alternative social insurance programs such as permanent disability and unemployment.
Fevang, Elisabeth, Inés Hardoy, og Knut Røed
H55, I38, J22
temporary disability, rehabilitation, hazard rate models, labor supply