Abstract
Abstract. We use structural estimation techniques to analyse labour supply effects of changes in economic incentives for individuals who have just finished vocational rehabilitation in Norway. The complicated and sometimes non‐convex budget sets for this group of marginal workers are accounted for. We also focus on the limitation in the choice sets this group faces. Parametric bootstrap and simulation techniques are applied to construct confidence intervals for the predicted impacts of changes in the economic environment. The results show that there is a small to moderate effect of changes in economic incentives on the chance of vocational rehabilitation bringing individuals back to employment. We also find that individual health status and local labour market conditions are the most important factors affecting the transition from rehabilitation to work.
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