During recent decades developed countries across the world have confronted significant financial challenges. One area that has come under increasing pressure is the provision of disability benefits to those unable to work full time. Even though there are large differences across countries, the share of working age individuals over the age of 60 who receive disability benefits is greater than 10% in most developed countries in 2010, expenditures on disability programs exceeded 30% of total expenditure on pensions, and surpassed 5% of GDP in several countries. One intuitive cause for this is population ageing, however there is evidence that the number of young individuals with work impeding disabilities is also increasing , thus emphasizing the societal relevance of these programs. Financial pressure is not the only concern. Different studies have shown that disability programs have become substitutes for unemployment benefits or early retirement since they create financial incentives for individuals to withdraw from the labor force prematurely.
In response, many governments have implemented reforms to curb the number of beneficiaries and expenditures on disability programs. This has been done by either tightening eligibility conditions to the different programs, or reducing the benefit amounts. One model for such policies in Europe is the Netherlands, which until the early 2000s was burdened by a substantially larger share of disability recipients than its European counterparts. A series of reforms implemented from 2004 onward sought to reduce government expenditures on disability benefits. The exemplary nature of the Dutch reforms provides an invaluable opportunity to better understand the impact of reducing benefit eligibility on a diverse set of policy relevant outcomes. In the first instance, this proposal will evaluate the causal relationship between disability benefits and labor force participation at the individual level. This will elucidate whether current trends are a direct consequence of the reforms or whether country level statistics are biased by other underlying trends or policies. While such reforms may have succeeded in reducing the number of benefit recipients, this proposal will also seek to evaluate in second instance whether tightening of benefit eligibility has an impact on individual level health. This is of great importance since protecting an individual’s health is a fundamental, yet often forgotten, explicit aim of these programs. The potential shift of financial burden from the social protection to the health system may in the end not be a desirable outcome from a societal perspective.
This project explores the role of disability programs in the Netherlands and disability in a worldwide context to understand how different programs, prevention strategies, or particular causes can be of greater relevance. This includes work on administrative records from the Netherlands but also exploiting studies and settings in other contexts.
