You are here: Home Seminar 2018 Summer Term Applied Micro Workshop – Josef Zweimüller, “Tightening Disability Screening or Reducing Disability Benefits? Evidence and Welfare Implications”

Applied Micro Workshop – Josef Zweimüller, “Tightening Disability Screening or Reducing Disability Benefits? Evidence and Welfare Implications”

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Andreas Haller, Stefan Staubli, and Josef Zweimüller: “Tightening Disability Screening or Reducing Disability Benefits? Evidence and Welfare Implications” This paper provides a simple framework to evaluate the welfare effects of stricter disability insurance (DI) screening versus lower DI benefits. We develop sufficient-statistics formulas, capturing the insurance value and incentive costs of changes in screening stringency and benefit levels, and implement them for Austria and the United States. In Austria, we exploit exogenous variation in screening stringency and benefit levels arising from several reforms. We find that stricter screening significantly reduces DI inflow through both a mechanical effect, capturing that fewer applicants qualify for benefits under the stricter rules, and a behavioral effect, capturing that less people apply for benefits. We also find that a decrease in benefits is associated with a significant reduction in DI inflow. Our analysis suggests that DI screening among older workers in Austria has been too lenient, but benefit levels are optimal. For the United States, we use existing estimates from previous studies and find that both relaxing screening and increasing benefits would improve welfare, but the welfare gains from relaxing screening are greater.

Event details
What
  • Presentation
When May 08, 2018
from 16:00 to 17:30
Where briq, Seminar Room 9/1.1, Schaumburg-Lippe-Straße 9
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