Seminar by Chiara dal Bianco


Health, Disability Insurance and Labour Supply: Evidence from a Dynamic Structural model

Seminar by Chiara dal Bianco, Università di Padova

Abstract: This paper provides a quantitative assessment of the labour market and welfare effects of the disability insurance (DI) benefit. To this end, I develop a life-cycle model in which individuals choose consumption, labour supply and whether to claim for DI. The effects revealed by counterfactual policy simulations are largely heterogeneous by health; low-health and poor individuals place a higher value on DI. If there is a reduction in the benefit amount, only half of those who leave the benefit return to work. Policies that reduce the cost of re-entering the labour market by 10% increase the labour supply by 5.3 percentage points among DI recipients, without decreasing welfare.