The heterogeneous impact of stricter criteria for disability insurance

The Netherlands reformed its disability insurance (DI) scheme in 2006. Eligibility for DI became stricter, reintegration incentives became stronger, and DI benefits
often became less generous. Based on administrative data on all individuals who reported sick shortly before and after the reform, difference-in-differences regressions
show that the reform reduced DI receipt by 5.2 percentage points and increased labor participation and unemployment insurance (UI) receipt by 1.2 and 1.1 percentage
points, respectively. It increased average monthly earnings and UI claims to overcompensate lost DI benefits. However, older individuals, women, individuals with temporary contracts, the unemployed, and low-wage earners did not compensate or compensated to a much smaller extent for the lost DI benefits. The effects are persistent during the 10 years after the reform.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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