Financial Incentives in Disability Insurance in the Netherlands

Abstract

SummaryIn this article, we assess the impact of financial incentives on the inflow in the public Disability Insurance (DI) scheme in The Netherlands. For this matter, the variation in replacement rates over different sectors is exploited to estimate the probability of DI enrolment over a sample of employees from the Dutch Income Panel (1996)(1997)(1998)(1999)(2000). On the basis of these administrative data, we find a point estimate of the elasticity of DI enrolment with respect to the DI wealth rate of 2.5. Simulations indicate that a 5%-point rise in replacement rates in the two first years of DI increases DI enrolment by 6%.

Gradual Retirement: Preferences and Limitations

“…Gradual retirement can also prevent labour market exit through alternative routes, i.e. unemployment and disability, which is particularly relevant in the Dutch context (see, e.g., Van Vuren and Van Vuuren 2007), particularly if (very) early retirement arrangements are abolished. For workers, the main advantage is a smooth transition to the next stage of life, and an escape from the choice between two inferior options: continuing in a stressful career job with the risk of work disability or full retirement with its negative financial and social consequences.…”

“…In addition, the government can stimulate gradual retirement through transparent tax measures that make gradual retirement more attractive for workers and less expensive for employers. The existing evidence suggests that in the Netherlands, tax favoured arrangements will work -the decision to take up gradual retirement or not is sensitive to financial incentives, like the decision to apply for disability insurance (Van Vuren and Van Vuuren 2007) or the decision to retire (Kapteyn and De Vos 1998). In particular, it seems important to ensure that staying in the labour market as a part-time worker is rewarded in the form of a higher old age pension.…”

The Decline of Early Retirement Pathways in the Netherlands: An Empirical Analysis for the Health Care Sector

“…A significant portion of the partially disabled is involved in gainful employment. Replacement rates of the disability benefits vary by firm or sector (Van Vuren and van Vuuren, 2007). In contrast to the DI schemes in many other western countries, the Dutch DI scheme lacks a minimum reference period.…”

The decline of substitute pathways into retirement: Empirical evidence from the Dutch health care sector

“…A significant number of those assessed as partially disabled are engaged in gainful employment. Disability benefit replacement rates vary according to enterprise or sector (Van Vuren and van Vuuren, 2007).…”