Abstract
We examine the role of health as a determinant of labour force participation, paying particular attention to the link between the two provided by disability insurance schemes. We first review the evidence on associations between health and labour force participation. Enrolment in disability insurance is not determined by health alone, and we highlight the main other causes that the literature has identified. In an application to The Netherlands, we follow the structure of the literature review and show that the trends in health and disability insurance enrolment look rather positive. In particular, the 1990 reforms of disability insurance might have been more effective than previously realised because part of their success was hidden by demographic change: The large number of baby boomers kept the absolute inflow high as they aged, despite large reductions in relative rates.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
Autor, D. H., & Duggan, M. G. (2003). The rise in the disability rolls and the decline in unemployment. Quarterly Journal of Economics, 118(1), 157.
Autor, D. H., & Duggan, M. G. (2006). The growth in the social security disability rolls: A fiscal crisis unfolding. Journal of Economic Perspectives, 20(3), 71–96.
Banks, J., Emmerson, C., & Tetlow, G. (2007). Healthy retirement or unhealthy inactivity: How important are financial incentives in explaining retirement? (Mimeo). Institute for Fiscal Studies, London.
Berthoud, R. (2008). Disability employment penalties in Britain. Work, Employment & Society, 22(1), 129–148.
Besseling, J., Hagen, B., Andriessen, S., te Peele, A., Crone, M., Kok, L., & de Vos, E. (2007). Toename gebruik ondersteuning voor jongeren met een gezondheidsbeperking (tNO Rapport No. 385), available www.tno.nl.
Bhattacharya, J., Choudhry, K., & Lakdawalla, D. N. (2008). Chronic disease and severe disability among working-age populations. Medical Care, 46(1), 92–100.
Black, D., Daniel, K., & Sanders, S. (2002). The impact of economic conditions on participation in disability programs: Evidence from the coal boom and bust. American Economic Review, 92(1), 27–50.
Blundell, R. W., & Preston, I. (1998). Consumption inequality and income uncertainty. Quarterly Journal of Economics, 113(2), 603–640.
Blundell, R. W., Pistaferri, L., & Preston, I. (2008). Consumption inequality and partial insurance. American Economic Review, 98(5), 1887–1921.
Bound, J., & Burkhauser, R. V. (1999). Economic analysis of transfer programs targeted on people with disabilities. In O. C. Ashenfelter & D. Card (Eds.), Handbook of labor economics (Vol. 3, pp. 3417–3528). Amsterdam: Elsevier, Chap. 51.
Bound, J., & Waidmann, T. (2002). Accounting for recent declines in employment rates among working-aged men and women with disabilities. The Journal of Human Resources, 37(2), 231–250.
Case, A., & Paxson, C. (2005). Sex differences in morbidity and mortality. Demography, 42(2), 189–214.
Crimmins, E. M., Reynolds, S. L., & Saito, Y. (1999). Trends in health and ability to work among the older working-age population. Journal of Gerontology, Series B, 54(1), S31–S40.
Cunha, F., & Heckman, J. J. (2007). The technology of skill formation. American Economic Review, 97(2), 31–47.
Cunha, F., & Heckman, J. J. (2008). Formulating, identifying and estimating the technology of cognitive and noncognitive skill formation. Journal of Human Resources, 43(4), 738–782.
Cunha, F., Heckman, J. J., Lochner, L., & Masterov, D. V. (2006). Interpreting the evidence on life cycle skill formation. In E. Hanushek & F. Welch (Eds.), Handbook of the economics of education (Vol. 1, pp. 697–812). Amsterdam: Elsevier.
Currie, J., & Madrian, B. C. (1999). Health, health insurance and the labor market. In O. C. Ashenfelter & D. Card (Eds.), Handbook of labor economics (Vol. 3, pp. 3309–3416). Amsterdam: Elsevier, Part 3, Chap. 50.
de Jong, P. (2008). Recent changes in Dutch disability policy (Mimeo). University of Amsterdam.
de Jong, P., & Thio, V. (2002). Donner versus Veldkamp: over nut en nadeel van gedeeltelijke wao-uitkeringen (aPE-report 53).
de Jong, P., Thio, V., & Barteling, H. (2005). Uwv als poortwachter (aPE report 127).
de Jong, P., Lindeboom, M., & van der Klaauw, B. (forthcoming). Screening disability insurance applications. Journal of the European Economic Association.
Duggan, M., & Imberman, S. (2006). Why are the disability rolls skyrocketing? The contribution of population characteristics, program changes and economic conditions. In D. Cutler & D. A. Wise (Eds.), Health in older ages: The causes and consequences of declining disability among the elderly. Chicago: University of Chicago Press.
García-Gómez, P. (2008). Institutions, health shocks and labour outcomes across Europe (Documento de Trabajo 2008-01 FEDEA).
García-Gómez, P., & López Nicolás, A. (2006). Health shocks, employment and income in the Spanish labour market. Health Economics, 15, 997–100.
Guiso, L., Pistaferri, L., & Schivardi, F. (2005). Insurance within the firm. Journal of Political Economy, 113(5), 1054–1087.
Heckman, J. J. (2008). Schools, skills, and synapses. Economic Inquiry, 46(1), 1.
Heckman, J. J., & Masterov, D. V. (2007). The productivity argument for investing in young children. Review of Agricultural Economics, 29(3), 446–493.
HMD (2009). Human mortality database. http://www.mortality.org.
Kapteyn, A., Smith, J. P., & van Soest, A. (2007). Vignettes and self-reports of work disability in the united states and the netherlands. American Economic Review, 97(1), 461–473.
Kerkhofs, M., Lindeboom, M., & Theeuwes, J. (1999). Retirement, financial incentives and health. Labour Economics, 6(2), 203–227.
Koning, P. W. C. (2009a). Experience rating and the inflow into disability insurance. De Economist, 157(3), 315–335.
Koning, P. W. C. (2009b). Herbezinning op onderkant arbeidsmarkt. Economisch Statistische Berichten, 94(4551), 24–25.
Koning, P. W. C., & van Vuuren, D. J. (2010). Disability insurance and unemployment insurance as substitute pathways. Applied Economics, 42(5), 575–588.
Kreider, B., & Riphahn, R. T. (2000). Explaining applications to the U.S. disability system: A semiparametric approach. The Journal of Human Resources, 35(1), 82–115.
Lakdawalla, D. N., Bhattacharya, J., & Goldman, D. P. (2004). Are the young becoming more disabled? Health Affairs, 23(1), 168–176.
Lechner, M., & Vazquez-Alvarez, R. (2004). The effect of disability on labour market outcomes in Germany: Evidence from matching (cEPR Discussion Paper 4223).
Lindeboom, M. (2006). Health and work for older workers. In A. M. Jones (Ed.), The Elgar companion to health economics (pp. 26–35). Cheltenham: Edward Elgar, Chap. 3.
Lindeboom, M., Llena Nozal, A., & van der Klaauw, B. (2007). Health shocks, disability and work (Netspar Discussion Paper 11/2007-026).
Low, H. W., & Pistaferri, L. (2010). Disability risk, disability insurance, and life-cycle behavior (nBER Working Paper 15962).
Low, H. W., Meghir, C., & Pistaferri, L. (forthcoming). Wage risk and employment risk over the life cycle. American Economic Review.
MaCurdy, T. E. (1982). The use of time series processes to model the error structure of earnings in a longitudinal data analysis. Journal of Econometrics, 18(1), 83–114.
McWhinnie, J. R., Törnudd, P., Ås, D., & Pelli, C. (1982). Measuring disability (5th ed.). OECD Social Indicator Development Programme, Special Studies, Paris: OECD.
Meghir, C., & Pistaferri, L. (2004). Income variance dynamics and heterogeneity. Econometrica, 72(1), 1–32.
Møller Danø, A. (2005). Road injuries and long-run effects on income and employment. Health Economics, 14(9), 955–970.
OECD (2008). Sickness, disability and work: Breaking the barriers : Vol. 3. Denmark, Finland, Ireland and The Netherlands. Paris: OECD Publishing.
OECD (2009). Employment outlook 2009: Tackling the jobs crisis. Paris: OECD Publishing.
Oeppen, J., & Vaupel, J. W. (2002). Broken limits to life expectancy. Science, 296(5570), 1029–1031.
Parsons, D. O. (1991). Self-screening in targeted public transfer programs. Journal of Political Economy, 99(4), 859.
Riphahn, R. T. (1999). Income and employment effects of health shocks a test case for the German welfare state. Journal of Population Economics, 12(3), 363–389.
Schweinhart, L. J., Barnes, H. V., & Weikart, D. P. (1993). Significant benefits: The high/scope Perry preschool study through age 27. Ypsilanti: High/Scope Press.
Schweinhart, L. J., Barnett, W. S., & Belfield, C. R. (2005). Lifetime effects: The high/scope Perry preschool study through age 40. Ypsilanti: High/Scope Press.
Stapleton, D. C., Coleman, K. A., Dietrich, K. A., & Livermore, G. A. (1998). Econometric analyses of DI and SSI application and award growth. In K. Rupp & D. C. Stapleton (Eds.), Growth in disability benefits explanations and policy implications. Kalamazoo: W. E. Upjohn Institute for Employment Research.
Suijker, F. W. (2007). Verdubbeling van de instroom in de wajong: Oorzaken en beleidsopties. Netherlands Bureau for Economic Policy Analysis, CPB Document 156.
Tweede Kamer der Staten-Generaal (2008). Wijziging van de wet arbeidsongeschiktheidsvoorziening jonggehandicapten in verband met het bevorderen van de participatie van jonggehandicapten door werk en arbeidsondersteuning (Memorie van Toelichting). Kamerstukken 31780, no. 3.
Uitvoering Werknemersverzekeringen (2007). De groei van de wajonginstroom (Kenniscahier 07-01).
Uitvoering Werknemersverzekeringen (2008). De participatiemogelijkheden van de wajonginstroom (Kenniscahier 08-01).
van Kippersluis, H., O’Donnell, O., van Doorslaer, E., & van Ourti, T. (2010). Socioeconomic differences in health over the life cycle in an egalitarian country. Social Science & Medicine, 70(3), 428–438.
van Sonsbeek, J.-M., & Gradus, R. H. J. M. (2006). A microsimulation analysis of the 2006 regime change in the Dutch disability scheme. Economic Modelling, 23, 427–456.
Author information
Authors and Affiliations
Corresponding author
Additional information
This research was funded by Stichting Instituut GAK and Netspar. The authors would like to thank Amco Wiering for excellent research assistance and Philip de Jong, Rob Euwals, and Jan-Maarten van Sonsbeek for useful comments regarding the Dutch Disability Insurance system. Three anonymous referees and seminar and conference participants at the Netherlands Bureau for Economic Policy Analysis (CPB), the Netspar Annual Conference “Rethinking Retirement”, and the October 2009 Netspar Panel—particularly our discussants Daniel van Vuuren, Katherine Carman, Wim Groot, Philip de Jong, Gijsbert van Lomwel, and Marc Koopmanschap—provided many comments that greatly helped to improve upon the paper.
Rights and permissions
Open Access This is an open access article distributed under the terms of the Creative Commons Attribution Noncommercial License (https://creativecommons.org/licenses/by-nc/2.0), which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.
About this article
Cite this article
García-Gómez, P., von Gaudecker, HM. & Lindeboom, M. Health, disability and work: patterns for the working age population. Int Tax Public Finance 18, 146–165 (2011). https://doi.org/10.1007/s10797-010-9150-z
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10797-010-9150-z