Disability Benefits, Consumption Insurance, and Household Labor Supply
Name
aer.20151231.pdf
Description
Published version
Size
774.26 KB
Format
Adobe PDF
Checksum (MD5)
6ff11f4c072effcd128936b0f9a87ac3
Author(s)
Autor, David H
Kostøl, Andreas
Mogstad, Magne
Setzler, Bradley
Date Issued
July 2019
Journal
American Economic Review
Publisher
American Economic Association
Citation
Autor, David et al. "Disability Benefits, Consumption Insurance, and Household Labor Supply." American Economic Review 109, 7 (July 2019): 2613-54 © 2019 American Economic Association
Version
Final published version
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.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1257/AER.20151231
