First Exits from the Swedish Labor Market Due to Disability

Abstract

Nowadays, with an increasingly aging population, an increasing proportion of the population on disability benefits, and an implicitly lower level of economic output and foregone tax revenue, disability has become a major public policy issue in many countries. Estimating both single risk and competing risks models on a Swedish longitudinal database, this study analyzes the risk of exit from the labor market due to disability at a certain age, conditional on having remained in the labor force until that age. The explanatory variables did not have identical coefficients across destination types. For example, the estimated single risk model shows that a higher level of education decreased the hazard of exiting the labor market with a disability pension, while the estimated competing risks model suggests that a higher level of education increased the hazard of exiting with a partial disability pension, but it decreased the hazard of exiting with a full disability pension.