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The Earnings and Employment Losses Before Entering the Disability System

Author

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  • Cervini-Plá, María

    (Universitat de Girona)

  • Vall-Castello, Judit

    (University of Barcelona)

Abstract
Although a number of papers in the literature have shown the employment and wage differences between disabled and non-disabled individuals, not much is known about the potential employment and wage losses that disabled individuals suffer before being officially accepted into the disability insurance system (DI). Therefore, in this paper we distinguish between individuals that enter the DI system due to a working accident (sudden health shock) and individuals that become disabled due to an ordinary illness to identify the differences in employment and wages between these two groups before they are officially accepted into the DI system. We combine matching models and difference-in-difference and we find that the wage (employment) growth patterns of both groups of workers become significantly different three (six) years before entering the DI system. More specifically, our estimates suggest that one year before entering the system, there is a difference of 27 Euros/month in the wages of the two groups (3% of average wage) as well as a 10 percentage point difference in employment probabilities.

Suggested Citation

  • Cervini-Plá, María & Vall-Castello, Judit, 2015. "The Earnings and Employment Losses Before Entering the Disability System," IZA Discussion Papers 8913, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8913
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    References listed on IDEAS

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    Cited by:

    1. Pilar García-Gómez & Sergi Jiménez-Martín & Judit Vall Castelló, 2017. "Health Capacity to Work at Older Ages: Evidence from Spain," NBER Chapters, in: Social Security Programs and Retirement around the World: The Capacity to Work at Older Ages, pages 269-300, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    disability system; employment; wage loss;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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