Re-Employment Dynamics of Disabled Workers

57 Pages Posted: 23 Apr 2001

See all articles by Hielke Buddelmeyer

Hielke Buddelmeyer

Melbourne Institute; IZA Institute of Labor Economics

Date Written: March 2001


We investigate the duration of time until the first work resumption for a cohort of people who receive disability insurance benefits. One of the peculiarities of the disability insurance program under investigation is that the level of benefits not only depends on previous wages, but also declines over time according to a schedule based on age, the amount of work experience, and the level of disability. As a result, different people will face different benefit schedules and hence are likely to make different choices regarding a return to work. To fully absorb the structural aspect of the disability program, we specify and estimate a behavioral labor supply model where individuals receive job offers that they can accept or decline. Possible reforms of the disability program are evaluated, including ending the disability program altogether.

Keywords: Disability, Labor Supply, Behavioral Modeling

JEL Classification: J22, J64, C41

Suggested Citation

Buddelmeyer, Hielke, Re-Employment Dynamics of Disabled Workers (March 2001). Available at SSRN: or

Hielke Buddelmeyer (Contact Author)

Melbourne Institute ( email )

161 Barry Street
Level 7
Parkville, Victoria 3010
+61383442091 (Phone)


IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

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