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Disability Benefits, Consumption Insurance, and Household Labor Supply

Author

Listed:
  • 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.

Suggested Citation

  • David Autor & Andreas Ravndal Kostol & Magne Mogstad & Bradley Setzler, 2017. "Disability Benefits, Consumption Insurance, and Household Labor Supply," NBER Working Papers 23466, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:23466
    Note: AG LS PE
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    More about this item

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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