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Push and Pull: Disability Insurance, Regional Labor Markets, and Benefit Generosity in Canada and the United States

In: Small Differences II: Public Policies in Canada and the United States

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  • Kevin S. Milligan
  • Tammy Schirle

Abstract

Disability insurance take-up has expanded substantially in the past 20 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 41% if benefits and wages had followed the growth path observed in Canada.
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Suggested Citation

  • Kevin S. Milligan & Tammy Schirle, 2016. "Push and Pull: Disability Insurance, Regional Labor Markets, and Benefit Generosity in Canada and the United States," NBER Chapters, in: Small Differences II: Public Policies in Canada and the United States, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:13971
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    2. Veronica Minaya & Brendan Moore & Judith Scott-Clayton, 2020. "The Effect of Job Displacement on College Enrollment: Evidence from Ohio," NBER Working Papers 27694, National Bureau of Economic Research, Inc.
    3. Regmi, Krishna, 2024. "Minimum Wages and the Uptake of Supplemental Security Income," IZA Discussion Papers 17074, Institute of Labor Economics (IZA).
    4. Jennifer Roberts & Karl Taylor, 2022. "New Evidence on Disability Benefit Claims in Britain: The Role of Health and the Local Labour Market," Economica, London School of Economics and Political Science, vol. 89(353), pages 131-160, January.
    5. David Albouy & Alex Chernoff & Chandler Lutz & Casey Warman, 2019. "Local Labor Markets in Canada and the United States," Journal of Labor Economics, University of Chicago Press, vol. 37(S2), pages 533-594.
    6. Musab Kurnaz & Terry A. Yip, 2022. "The Canadian income taxation: Statistical analysis and parametric estimates," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(1), pages 272-311, February.
    7. Morley Gunderson & Byron Lee & Guenther Lomas, 2022. "The importance of prejudice against persons with disabilities," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(1), pages 138-155, February.
    8. Taylor, Karl & Bhadury, Soumya & Binner, Jane & Mandal, Anandadeep, 2024. "Business Cycle Turning Points and Local Labour Markets," IZA Discussion Papers 17153, Institute of Labor Economics (IZA).
    9. Roberts, Jennifer & Taylor, Karl, 2019. "New Evidence on Disability Benefit Claims in the UK: The Role of Health and the Local Labour Market," IZA Discussion Papers 12825, Institute of Labor Economics (IZA).
    10. Kevin Milligan & Tammy Schirle, 2021. "The evolution of longevity: Evidence from Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 164-192, February.
    11. Pierre Brochu & Jonathan Créchet, 2021. "Survey Non-response in Covid-19 Times: The Case of the Labour Force Survey," Working Papers 2109E, University of Ottawa, Department of Economics.
    12. George J. Borjas & David J.G. Slusky, 2018. "Health, Employment, and Disability: Implications from the Undocumented Population," NBER Working Papers 24504, National Bureau of Economic Research, Inc.
    13. Bastian, Jacob E. & Jones, Maggie R., 2021. "Do EITC expansions pay for themselves? Effects on tax revenue and government transfers," Journal of Public Economics, Elsevier, vol. 196(C).

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    More about this item

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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