How financial incentives induce disability insurance recipients to return to work

Research output: Contribution to journalArticlepeer-review

46 Scopus citations

Abstract

Using a local randomized experiment that arises from a sharp discontinuity in Disability Insurance (DI) policy in Norway, we provide transparent and credible identification of how financial incentives induce DI recipients to return to work. We find that many DI recipients have considerable capacity to work that can be effectively induced by providing financial work incentives. We further show that providing work incentives to DI recipients may both increase their disposable income and reduce program costs. Our findings also suggest that targeted policies may be the most effective in encouraging DI recipients to return to work.

Original languageEnglish (US)
Pages (from-to)624-655
Number of pages32
JournalAmerican Economic Review
Volume104
Issue number2
DOIs
StatePublished - Feb 2014
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics

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