Push and Pull: Disability Insurance, Regional Labor Markets, and Benefit Generosity in Canada and the United States

50 Pages Posted: 18 May 2017 Last revised: 14 Jun 2021

See all articles by Kevin S. Milligan

Kevin S. Milligan

University of British Columbia (UBC) - Department of Economics; National Bureau of Economic Research (NBER)

Tammy Schirle

Wilfrid Laurier University - School of Business & Economics

Date Written: May 2017

Abstract

Disability insurance take-up has expanded substantially in the past twenty years in the United States while shrinking in Canada. We empirically assess these trends by measuring the strength of the ‘push’ from weak labor markets versus the ‘pull’ of more generous benefits. Using an instrumental variables strategy comparing benefit changes across country, age, and year, we find that both benefits and regional wages matter. Simulations suggest that the upswing in disability insurance take-up in the United States would be reversed, dropping the caseload by one third, if benefits and wages had followed the growth path observed in Canada.

Suggested Citation

Milligan, Kevin S. and Schirle, Tammy, Push and Pull: Disability Insurance, Regional Labor Markets, and Benefit Generosity in Canada and the United States (May 2017). Available at SSRN: https://ssrn.com/abstract=2968243

Kevin S. Milligan (Contact Author)

University of British Columbia (UBC) - Department of Economics ( email )

997-1873 East Mall
Vancouver, BC V6T 1Z1
Canada

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Tammy Schirle

Wilfrid Laurier University - School of Business & Economics ( email )

Waterloo, Ontario N2L 3C5
Canada

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