Econometrica Vol. 92 No. 1 2024

Designing Disability Insurance Reforms: Tightening Eligibility Rules or Reducing Benefits?

Andreas Haller¹; Stefan Staubli^2,3,4,5; Josef Zweimüller^6,3,7,4

¹ Department of Economics, Norwegian School of Economics · ² Department of Economics, University of Calgary · ³ CEPR , · ⁴ IZA · ⁵ NBER · ⁶ Department of Economics, University of Zurich () · ⁷ CESifo

Abstract

This paper develops a sufficient statistics framework for analyzing the welfare effects of disability insurance (DI). We derive social‐optimality conditions for the two main DI policy parameters: (i) eligibility rules and (ii) benefit levels. Applying this framework to two restrictive DI reforms in Austria, we find that tighter DI eligibility rules triggered higher fiscal cost savings and lower insurance losses. Hence, tighter DI eligibility rules dominate DI benefit reductions in scaling back the Austrian DI system.

DOI

10.3982/ecta19021

Volume

92

Issue

1

Pages

79-110

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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