Take-Up and Labor Supply Responses to Disability Insurance Earnings Limits

In most disability insurance programs, beneficiaries lose some or all of their benefits if they earn above an earnings threshold. While intended to screen out applicants with high remaining working capacity, earnings limits can also distort the labor supply of beneficiaries. This paper develops a si...

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Bibliographic Details
Main Author: Kreko, Judit
Other Authors: Weber, Andrea, Prinz, Daniel
Format: eBook
Language:English
Published: Washington, D.C The World Bank 2023
Subjects:
Online Access:
Collection: World Bank E-Library Archive - Collection details see MPG.ReNa
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100 1 |a Kreko, Judit 
245 0 0 |a Take-Up and Labor Supply Responses to Disability Insurance Earnings Limits  |h Elektronische Ressource  |c Judit Kreko 
260 |a Washington, D.C  |b The World Bank  |c 2023 
300 |a 37 pages 
653 |a Labor Supply 
653 |a Earnings Limit 
653 |a Beneficiary Screening 
653 |a Disability Insurance 
653 |a Social Protections and Labor 
653 |a Disability 
653 |a Policy Reform 
653 |a Employment 
700 1 |a Weber, Andrea 
700 1 |a Prinz, Daniel 
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028 5 0 |a 10.1596/1813-9450-10325 
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082 0 |a 330 
520 |a In most disability insurance programs, beneficiaries lose some or all of their benefits if they earn above an earnings threshold. While intended to screen out applicants with high remaining working capacity, earnings limits can also distort the labor supply of beneficiaries. This paper develops a simple framework to evaluate this trade-off. It uses a reduction in the earnings limit in Hungary to examine screening and labor supply responses. The findings show that the policy changed selection into the program modestly, but it reduced labor supply significantly. Viewed through the lens of the model, these findings suggest that the earnings threshold should be higher