The Earnings and Employment Losses Before Entering the Disability System

32 Pages Posted: 30 Mar 2015

See all articles by María Cervini-Plá

María Cervini-Plá

University of Girona - Department of Economics

Judit Vall Castelló

Universitat Pompeu Fabra (UPF) - Center for Research in Health and Economics (CRES)

Abstract

Although a number of papers in the literature have shown the employment and wage differences between disabled and non-disabled individuals, not much is known about the potential employment and wage losses that disabled individuals suffer before being officially accepted into the disability insurance system (DI). Therefore, in this paper we distinguish between individuals that enter the DI system due to a working accident (sudden health shock) and individuals that become disabled due to an ordinary illness to identify the differences in employment and wages between these two groups before they are officially accepted into the DI system. We combine matching models and difference-in-difference and we find that the wage (employment) growth patterns of both groups of workers become significantly different three (six) years before entering the DI system. More specifically, our estimates suggest that one year before entering the system, there is a difference of 27 Euros/month in the wages of the two groups (3% of average wage) as well as a 10 percentage point difference in employment probabilities.

Keywords: disability system, employment, wage loss

JEL Classification: J31, I13

Suggested Citation

Cervini-Plá, María and Castelló, Judit Vall, The Earnings and Employment Losses Before Entering the Disability System. IZA Discussion Paper No. 8913, Available at SSRN: https://ssrn.com/abstract=2586416 or http://dx.doi.org/10.2139/ssrn.2586416

María Cervini-Plá (Contact Author)

University of Girona - Department of Economics ( email )

Campus de Montilivi
Girona, Girona 17071
Spain

Judit Vall Castelló

Universitat Pompeu Fabra (UPF) - Center for Research in Health and Economics (CRES) ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

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