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Department of Economics, Stockholm University Research Papers in Economics, Department of Economics, Stockholm University

No 2008:3:
The Employment Effect of Stricter Rules for Eligibility for DI: Evidence from a Natural Experiment in Sweden

Anders Karlström (), Mårten Palme () and Ingemar Svensson ()

Abstract: We study the effect of a reform of the Swedish disability insurance (DI) program whereby the special eligibility rules for workers in the age group 60 to 64 were abolished. First, we use a differences-in-differences approach to study changes in the disability take-up as compared to the age group 55 to 59. Then, we use a similar approach to study to what extent the employment effect of the reform is "crowded out" by an increase in the utilization of the sickpay insurance (SI) and/or the unemployment insurance (UI). In an extended analysis, we study the effect of firm closure on employment and the utilization of different labor market insurance programs in different age groups before and after the reform.

Keywords: Disability Insurance; Early Retirement; (follow links to similar papers)

JEL-Codes: H53; H55; H59; J21; J26; (follow links to similar papers)

33 pages, April 11, 2008

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