Working Paper: NBER ID: w23466
Authors: David Autor; Andreas Ravndal Kostol; Magne Mogstad; Bradley Setzler
Abstract: 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.
Keywords: disability insurance; household income; labor supply; instrumental variables
JEL Codes: H53; H55; I38; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Disability Insurance (DI) receipt (H53) | external costs to taxpayers (H59) |
| Disability Insurance (DI) receipt (H53) | annual earnings (J31) |
| Disability Insurance (DI) receipt (H53) | average household income (D19) |
| Disability Insurance (DI) receipt (H53) | consumption expenditure (E20) |
| Disability Insurance (DI) receipt for single applicants (G52) | household income (D19) |
| Disability Insurance (DI) receipt for single applicants (G52) | consumption (E21) |
| Disability Insurance (DI) receipt for married applicants (G52) | household income (D19) |
| Disability Insurance (DI) receipt for married applicants (G52) | consumption (E21) |