Disability in the Welfare State: An Unemployment Problem in Disguise?

49 Pages Posted: 26 Apr 2010

See all articles by Bernt Bratsberg

Bernt Bratsberg

Kansas State University - Department of Economics; University of Oslo - Ragnar Frisch Centre for Economic Research

Elisabeth Fevang

University of Oslo - Ragnar Frisch Centre for Economic Research

Knut Roed

Ragnar Frisch Centre for Economic Research; IZA Institute of Labor Economics

Abstract

Economies with low unemployment often have high disability rates. In Norway, the permanent disability insurance rolls outnumber registered unemployment by four to one. Based on administrative register data matched with firms' financial statements and closure data collected from bankruptcy proceedings, we show that a large fraction of Norwegian disability insurance claims can be directly attributed to job displacement and other adverse shocks to employment opportunities. For men, we estimate that job loss more than doubles the risk of entry to permanent disability and that displacements account for fully 28 percent of all new disability insurance claims. We conclude that unemployment and disability insurance are close substitutes.

Keywords: disability, displacement, social insurance, employment opportunities

JEL Classification: H55, I12, I38, J63, J65

Suggested Citation

Bratsberg, Bernt and Fevang, Elisabeth and Røed, Knut, Disability in the Welfare State: An Unemployment Problem in Disguise?. IZA Discussion Paper No. 4897, Available at SSRN: https://ssrn.com/abstract=1595538

Bernt Bratsberg (Contact Author)

Kansas State University - Department of Economics ( email )

Manhattan, KS 66502-4001
United States

University of Oslo - Ragnar Frisch Centre for Economic Research

Gaustadalleen 21
N-0349 Oslo
Norway

Elisabeth Fevang

University of Oslo - Ragnar Frisch Centre for Economic Research ( email )

Gaustadalleen 21
N-0317 Oslo
Norway

Knut Røed

Ragnar Frisch Centre for Economic Research ( email )

Gaustadalleen 21
N-0349 Oslo
Norway

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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