TY - JOUR
T1 - How financial incentives induce disability insurance recipients to return to work
AU - Kostøl, Andreas Ravndal
AU - Mogstad, Magne
PY - 2014/2
Y1 - 2014/2
N2 - Using a local randomized experiment that arises from a sharp discontinuity in Disability Insurance (DI) policy in Norway, we provide transparent and credible identification of how financial incentives induce DI recipients to return to work. We find that many DI recipients have considerable capacity to work that can be effectively induced by providing financial work incentives. We further show that providing work incentives to DI recipients may both increase their disposable income and reduce program costs. Our findings also suggest that targeted policies may be the most effective in encouraging DI recipients to return to work.
AB - Using a local randomized experiment that arises from a sharp discontinuity in Disability Insurance (DI) policy in Norway, we provide transparent and credible identification of how financial incentives induce DI recipients to return to work. We find that many DI recipients have considerable capacity to work that can be effectively induced by providing financial work incentives. We further show that providing work incentives to DI recipients may both increase their disposable income and reduce program costs. Our findings also suggest that targeted policies may be the most effective in encouraging DI recipients to return to work.
UR - http://www.scopus.com/inward/record.url?scp=84894126631&partnerID=8YFLogxK
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U2 - 10.1257/aer.104.2.624
DO - 10.1257/aer.104.2.624
M3 - Article
C2 - 29533562
AN - SCOPUS:84894126631
SN - 0002-8282
VL - 104
SP - 624
EP - 655
JO - American Economic Review
JF - American Economic Review
IS - 2
ER -