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Behavioural Responses to Disability Insurance Generosity in a Work-Compatibility Setting

Author

Listed:
  • Zantomio, Francesca

    (Ca' Foscari University of Venice)

  • Belloni, Michele

    (University of Torino)

  • Carrieri, Vincenzo

    (University of Calabria)

  • Farina, Elena

    (ASL TO3 Grugliasco)

  • Simonetti, Irene

    (Ca' Foscari University of Venice)

Abstract

We investigate behavioral responses to the generosity of Disability Insurance (DI) within the context of work compatibility. Exploiting an institutional discontinuity leading to exogenous variation in replacement rates, we use rich administrative data on the work and health histories of Italian private sector workers and focus on individuals impacted by acute CVD shocks leading to unplanned hospitalizations. Using a Regression Discontinuity strategy, we identify a substantial DI response to benefit generosity, suggesting an elasticity of DI participation of 1.26. Additionally, we observe a smaller employment response, with an estimated elasticity of -0.15. Our findings indicate that the receipt of DI is widely perceived as a complement to labour income within a framework of work compatibility. These results carry significant implications for the design of labour-inclusive DI scheme.

Suggested Citation

  • Zantomio, Francesca & Belloni, Michele & Carrieri, Vincenzo & Farina, Elena & Simonetti, Irene, 2024. "Behavioural Responses to Disability Insurance Generosity in a Work-Compatibility Setting," IZA Discussion Papers 16819, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16819
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    References listed on IDEAS

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    More about this item

    Keywords

    disability insurance; elasticity; replacement rate; labour supply; regression discontinuity;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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