Financial Work Incentives for Disability Benefit Recipients: Lessons from a Randomised Field Experiment

44 Pages Posted: 30 Dec 2014

See all articles by Monika Butler

Monika Butler

University of St. Gallen; CESifo (Center for Economic Studies and Ifo Institute)

Eva Deuchert

University of St. Gallen

Michael Lechner

University of St. Gallen - Swiss Institute for Empirical Economic Research

Stefan Staubli

University of Calgary

Petra Thiemann

Lund University - School of Economics and Management; IZA Institute of Labor Economics; USC Dornsife Institute for New Economic Thinking

Abstract

Disability insurance (DI) beneficiaries lose part of their benefits if their earnings exceed certain thresholds (“cash-cliffs”). This implicit taxation is considered the prime reason for low DI outflow. We analyse a conditional cash program that incentivises work related reductions of disability benefits in Switzerland. 4,000 randomly selected DI recipients receive an offer to claim up to CHF 72,000 (USD 71,000) if they expand work hours and reduce benefits. Initial reactions to the program announcement, measured by call-back rates, are modest; individuals at cash-cliffs react more frequently. By the end of the field phase, the take-up rate amounts to only 0.5%.

Keywords: disability insurance, field experiment, financial incentive, return-to-work

JEL Classification: H55, J14, C93, D04

Suggested Citation

Bütler, Monika and Deuchert, Eva and Lechner, Michael and Staubli, Stefan and Thiemann, Petra, Financial Work Incentives for Disability Benefit Recipients: Lessons from a Randomised Field Experiment. IZA Discussion Paper No. 8715, Available at SSRN: https://ssrn.com/abstract=2543909

Monika Bütler (Contact Author)

University of St. Gallen ( email )

Varnbuelstr. 14
Saint Gallen, St. Gallen CH-9000
Switzerland

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Eva Deuchert

University of St. Gallen ( email )

Varnbuelstr. 14
Saint Gallen, St. Gallen CH-9000
Switzerland

Michael Lechner

University of St. Gallen - Swiss Institute for Empirical Economic Research ( email )

Varnbuelstrasse 14
St. Gallen, 9000
Switzerland
+41 71 224 2320 (Phone)

Stefan Staubli

University of Calgary ( email )

University Drive
Calgary, Alberta T2N 1N4
Canada

Petra Thiemann

Lund University - School of Economics and Management ( email )

Tycho Brahes väg 1,
S-220 07 Lund, 223 63
Sweden

IZA Institute of Labor Economics ( email )

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

USC Dornsife Institute for New Economic Thinking ( email )

3620 S. Vermont Avenue, KAP 364F
Los Angeles, CA 90089-0253
United States

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