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Fundamentally Reforming the DI System: Evidence from German Notch Cohorts

Author

Listed:
  • Bjoern Fischer
  • Johannes Micha Geyer
  • Nicolas R. Ziebarth

Abstract

This paper studies how the private DI market and consumers responded to a reform that abolished public occupational disability insurance (ODI) for German cohorts born after 1960. The first part shows a causal reduction in overall DI inflows by more than 30% in the long-run. The second part studies the private individual risk-rated ODI market. Representative data do not show substantial increases in take-up. A general equilibrium model featuring the social safety net, asymmetric information and administrative costs can rationalize these weak private-public interactions as well as stylized facts such as strong private ODI take-up gradients by income and health. It also simulates policies that could have increased take-up further in the course of the reform and assesses their welfare effects. However, although welfare improving, none of the feasible reforms would have increased take-up to more than 60%.

Suggested Citation

  • Bjoern Fischer & Johannes Micha Geyer & Nicolas R. Ziebarth, 2022. "Fundamentally Reforming the DI System: Evidence from German Notch Cohorts," NBER Working Papers 30812, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30812
    Note: AG EH LS PE
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    Cited by:

    1. Pichler, Stefan & Ziebarth, Nicolas R., 2024. "Sick Leave and Medical Leave in the United States: A Categorization and Recent Trends," IZA Policy Papers 206, Institute of Labor Economics (IZA).
    2. Collischon, Matthias & Hiesinger, Karolin & Pohlan, Laura, 2023. "Disability and Labor Market Performance," IZA Discussion Papers 16100, Institute of Labor Economics (IZA).

    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
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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