Social Interaction Effects in Disability Pension Participation: Evidence from Plant Downsizing

32 Pages Posted: 27 Nov 2012

See all articles by Mari Rege

Mari Rege

University of Stavanger

Kjetil Telle

Statistics Norway - Research Department

Mark Votruba

Case Western Reserve University - Weatherhead School of Management

Date Written: December 2012

Abstract

We estimate the magnitude of social interaction effects in disability pension participation among older workers in Norway. The problem of omitted variable bias is addressed using the exposure of an individual's neighbors to plant‐downsizing events as an instrument for the disability entry rate among the individual's previously employed neighbors. Our instrumental variable (IV) estimates suggest that an increase of one percentage point in the participation rate of previously employed neighbors increased the subsequent four‐year entry rate of older workers by about 0.4 percentage points. Numerous robustness and specification tests appear to support the validity of the identifying assumption in our IV strategy.

Keywords: Disability, downsizing, social insurance, social interaction, welfare norms

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

Suggested Citation

Rege, Mari and Telle, Kjetil and Votruba, Mark, Social Interaction Effects in Disability Pension Participation: Evidence from Plant Downsizing (December 2012). The Scandinavian Journal of Economics, Vol. 114, Issue 4, pp. 1208-1239, 2012, Available at SSRN: https://ssrn.com/abstract=2181263 or http://dx.doi.org/10.1111/j.1467-9442.2012.01719.x

Mari Rege

University of Stavanger ( email )

PB 8002
Stavanger, 4036
Norway

Kjetil Telle

Statistics Norway - Research Department ( email )

Kongens Gt. 6
PO Box 8131 Dep
N-0033 Oslo
Norway

Mark Votruba

Case Western Reserve University - Weatherhead School of Management ( email )

10900 Euclid Ave.
Cleveland, OH 44106-7235
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1
Abstract Views
295
PlumX Metrics