Local Labor Demand and Participation in Social Insurance Programs

33 Pages Posted: 14 Oct 2019

See all articles by Asbjørn Andersen

Asbjørn Andersen

University of Oslo - Ragnar Frisch Centre for Economic Research

Simen Markussen

University of Oslo - Ragnar Frisch Centre for Economic Research

Knut Røed

University of Oslo - Ragnar Frisch Centre for Economic Research

Abstract

Based on administrative data from Norway, we explore the "grey area" between the roles of unemployment- and temporary disability-insurances by examining how participation in these two program types is affected by local labor demand conditions. Local labor demand is identified by means of a shift-share instrumental variables strategy, where initial local industry-composition is interacted with sub-sequent national industry-specific employment fluctuations. Our results indicate that local labor demand has a large negative effect on the propensity to claim disability insurance, which, for some groups, is remarkably similar to its effect on the propensity to claim unemployment insurance. Based on this finding, we question whether it is meaningful to maintain a sharp distinction between these two programs.

Keywords: unemployment, disability insurance, program substitution, shift-share analysis

JEL Classification: J23, J58, J65, H55

Suggested Citation

Andersen, Asbjørn and Markussen, Simen and Røed, Knut, Local Labor Demand and Participation in Social Insurance Programs. IZA Discussion Paper No. 12669, Available at SSRN: https://ssrn.com/abstract=3468616 or http://dx.doi.org/10.2139/ssrn.3468616

Asbjørn Andersen (Contact Author)

University of Oslo - Ragnar Frisch Centre for Economic Research

Gaustadalleen 21
N-0317 Oslo
Norway

Simen Markussen

University of Oslo - Ragnar Frisch Centre for Economic Research

Gaustadalleen 21
N-0317 Oslo
Norway

Knut Røed

University of Oslo - Ragnar Frisch Centre for Economic Research

Gaustadalleen 21
N-0317 Oslo
Norway

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