Selective Exercise of Discretion in Disability Insurance Awards

50 Pages Posted: 11 Feb 2023

See all articles by Pilar Garcia-Gomez

Pilar Garcia-Gomez

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Pierre Koning

CPB Netherlands Bureau of Economic Policy Analysis

Owen O'Donnell

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Carlos Riumallo Herl

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Abstract

Variation in assessor stringency in awarding benefits leaves applicants exposed to uninsured risk that could be systematic if discretion were exercised selectively. We test for this using administrative data on applications to the Dutch disability insurance program. We find that discretion is more often exercised in favor of lower-waged applicants. Pre-disability wages drop discontinuously just above disability thresholds for entitlement to partial benefits. Assessors are more likely to discard the highest-paying algorithm-generated job matches that determine earnings capacity and entitlement when evaluating lower-waged applicants. While these applicants benefit on average, they are exposed to greater risk from between assessor variation.

Keywords: disability insurance, screening

JEL Classification: D73, H42, H55

Suggested Citation

Garcia Gomez, Pilar and Koning, Pierre and O'Donnell, Owen and Riumallo Herl, Carlos, Selective Exercise of Discretion in Disability Insurance Awards. IZA Discussion Paper No. 15928, Available at SSRN: https://ssrn.com/abstract=4354405 or http://dx.doi.org/10.2139/ssrn.4354405

Pilar Garcia Gomez (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Pierre Koning

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands
+31 703383380 (Phone)
+31 703383350 (Fax)

Owen O'Donnell

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Carlos Riumallo Herl

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

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