TY - JOUR
T1 - Disability benefits, consumption insurance, and household labor supply
AU - Autor, David
AU - Kostøl, Andreas
AU - Mogstad, Magne
AU - Setzler, Bradley
N1 - Funding Information:
*Autor: Department of Economics, Massachusetts Institute of Technology, 50 Memorial Drive, E52-371, Cambridge, MA 02142, and National Bureau of Economic Research (email: dautor@mit.edu); Kostøl: Research Department, Norges Bank, Postboks 1179 Sentrum, 0107 Oslo, Norway, and Statistics Norway (email: andreas.r.kostol@gmail.com); Mogstad: Department of Economics, University of Chicago, 1126 E. 59th Street, Chicago, IL 60637, Statistics Norway, and NBER (email: magne.mogstad@gmail.com); Setzler: Department of Economics, University of Chicago, 1126 E. 59th Street, Chicago, IL 60637 (email: bradley.setzler@gmail. com). Hilary Hoynes was the coeditor for this article. This research was supported by the US Social Security Administration through grant 1 DRC12000002-03 to the NBER as part of the SSA Disability Research Consortium. The findings and conclusions expressed are solely those of the authors and do not represent the views of SSA, any agency of the Federal Government, or the NBER. This paper should not be reported as representing the views of Norges Bank. The views expressed are those of the authors and do not necessarily reflect those of Norges Bank. The project also received financial support from the Norwegian Research Council. The authors declare that they have no relevant or material financial interests that relate to the research described in this paper. We are grateful to Richard Blundell, Raj Chetty, Amy Finkelstein, Kai Liu, Nathan Hendren, Hamish Low, Luigi Pistaferri, Alessandra Voena, three anonymous referees, and the editor of this journal for valuable input and guidance, and to Knut Brofoss, Espen Vihle, and Runar Narvland for their help in accessing the data and in understanding the institutional details.
Publisher Copyright:
© 2019 American Economic Association. All rights reserved.
PY - 2019
Y1 - 2019
N2 - There is no evaluation of the consequences of Disability Insurance (DI) receipt that captures the effects on households' net income and consumption expenditure, family labor supply, or benefits from other programs. Combining detailed register data from Norway with an instrumental variables approach based on random assignment to appellant judges, we comprehensively assess how DI receipt affects these understudied outcomes. To consider the welfare implications of the findings from this instrumental variables approach, we estimate a dynamic model of household behavior that translates employment, reapplication, and savings decisions into revealed preferences for leisure and consumption. The model-based results suggest that on average, the willingness to pay for DI receipt is positive and sizable. Because spousal labor supply strongly buffers the household income and consumption effects of DI allowances, the estimated willingness to pay for DI receipt is smaller for married than single applicants.
AB - There is no evaluation of the consequences of Disability Insurance (DI) receipt that captures the effects on households' net income and consumption expenditure, family labor supply, or benefits from other programs. Combining detailed register data from Norway with an instrumental variables approach based on random assignment to appellant judges, we comprehensively assess how DI receipt affects these understudied outcomes. To consider the welfare implications of the findings from this instrumental variables approach, we estimate a dynamic model of household behavior that translates employment, reapplication, and savings decisions into revealed preferences for leisure and consumption. The model-based results suggest that on average, the willingness to pay for DI receipt is positive and sizable. Because spousal labor supply strongly buffers the household income and consumption effects of DI allowances, the estimated willingness to pay for DI receipt is smaller for married than single applicants.
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U2 - 10.1257/aer.20151231
DO - 10.1257/aer.20151231
M3 - Article
AN - SCOPUS:85068342902
SN - 0002-8282
VL - 109
SP - 2613
EP - 2654
JO - American Economic Review
JF - American Economic Review
IS - 7
ER -