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Job loss, disability insurance and health expenditures

Author

Listed:
  • Aniko Biro

    (“Lendület” Health and Population Research Group Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)

  • Peter Elek

    (Department of Economics, Eötvös Loránd University (ELTE) and “Lendület” Health and Population Research Group Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)

Abstract
We analyse the causal effect of job loss on disability insurance enrolment on a five-year horizon and the implications on health expenditures. Using individual level administrative panel data from Hungary, we follow individuals displaced due to a mass lay-off and compare their labour force status to non-laid-off individuals with similar employment and health history, chosen with propensity score matching. According to our estimates, being laid off increases the transition probability to disability by 50% (or 1.4% points) in four years, and half of the excess transitions occur within the first year. We find a greater than average effect among older individuals and those who were in worse health before. Outpatient, inpatient and pharmaceutical expenditure increases 3.5-4 times when a laid-off individual takes up disability benefit, and decreases slightly afterwards, but does not reach the pre-disability levels. This health expenditure pattern resembles that observed around the diagnosis of previously undetected chronic diseases, such as diabetes or hypertension, but genuine health shocks may also be present. The increase in health expenditure corresponds to 20-25% of the additional disability payments in the medium term.

Suggested Citation

  • Aniko Biro & Peter Elek, 2019. "Job loss, disability insurance and health expenditures," CERS-IE WORKING PAPERS 1908, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:1908
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    3. Tsai, Yung-Yu & Huang, Po-Chun & Yang, Tzu-Ting, 2024. "Long-term effects of job displacement on earnings and mental health: Evidence from population-wide administrative data," Economics Letters, Elsevier, vol. 238(C).

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    More about this item

    Keywords

    administrative panel data; disability insurance; displacement; health expenditures;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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