Working Paper: NBER ID: w23405
Authors: Kevin Milligan; Tammy Schirle
Abstract: Disability insurance take-up has expanded substantially in the past twenty years in the United States while shrinking in Canada. We empirically assess these trends by measuring the strength of the ‘push’ from weak labor markets versus the ‘pull’ of more generous benefits. Using an instrumental variables strategy comparing benefit changes across country, age, and year, we find that both benefits and regional wages matter. Simulations suggest that the upswing in disability insurance take-up in the United States would be reversed, dropping the caseload by one third, if benefits and wages had followed the growth path observed in Canada.
Keywords: Disability Insurance; Labor Markets; Benefit Generosity
JEL Codes: H53; I38; J21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Regional wages (J39) | Disability insurance takeup (G52) |
| Benefit levels (H55) | Disability insurance takeup (G52) |
| US benefit levels and wages trends (following Canada) (J31) | Disability insurance takeup (G52) |