Abstract
This study explores the interrelated roles of health and welfare state policies in the decision to take up disability insurance (DI) benefits due to work disability (WD), defined as the (partial) inability to engage in gainful employment as a result of physical or mental illness. We exploit the large international variation of health, self-reported WD, and the uptake of DI benefits in the United States and Europe using a harmonized data set with life history information assembled from SHARE, ELSA, and HRS. We find that the mismatch between WD and DI benefit receipt varies greatly across countries. Objective health explains a substantial share of the within-country variation in DI, but this is not the case for the variation across countries. Rather, most of the variation between countries and the mismatches are explained by differences in DI policies.
Highlights
Work disability (WD) is the inability to engage in gainful employment due to physical or mental illness, resulting in early retirement and/or uptake of disability insurance benefits (Loisel and Anema 2014)
We find that health problems experienced over the life course even as early as during childhood are important drivers of later life working capacity and the need to rely on disability insurance (DI) benefits
Health problems experienced over the life course and even as early as childhood are important drivers of later life working capacity and the need to rely on DI benefits
Summary
Work disability (WD) is the (partial) inability to engage in gainful employment due to physical or mental illness, resulting in early retirement and/or uptake of disability insurance benefits (Loisel and Anema 2014). Disability insurance may be (mis-)used as an early retirement route even if the ability to work is not limited. Both self-reported WD and DI uptake vary substantially between countries. The key idea of the paper is to exploit the large variation of the potential causes for reporting a WD and/or receiving DI benefits within and between countries. Life-course factors are a second group of potential causes for reporting a WD and/or receiving DI benefits. We find that health problems experienced over the life course even as early as during childhood are important drivers of later life working capacity and the need to rely on DI benefits
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