Recent Findings in Economic Policy Described by Researchers from University of Zurich (Financial Incentives and Earnings of Disability Insurance Recipients: Evidence From a Notch Design)

2019 JUN 03 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- A new study on Economics - Economic Policy is now available. According to news reporting originating from Zurich, Switzerland, by NewsRx correspondents, research stated, “Most countries reduce disability insurance (DI) benefits for beneficiaries earning above a specified threshold. Such an earnings threshold generates a discontinuous increase in tax liability-a notch-and creates an incentive to keep earnings below the threshold.”

Financial supporters for this research include Austrian National Science Research Network “Labor and Welfare State” of the Austrian FWF, National Institute on Aging, US Social Security Administration.

Our news editors obtained a quote from the research from the University of Zurich, “Exploiting such a notch in Austria, we provide transparent and credible identification of the effect of financial incentives on DI beneficiaries’ earnings. Using rich administrative data, we document large and sharp bunching at the earnings threshold. However, the elasticity driving these responses is small.”

According to the news editors, the research concluded: “Our estimate suggests that relaxing the earnings threshold reduces fiscal cost only if program entry is very inelastic.”

For more information on this research see: Financial Incentives and Earnings of Disability Insurance Recipients: Evidence From a Notch Design. American Economic Journal Economic Policy, 2019;11(2):269-300. American Economic Journal Economic Policy can be contacted at: Amer Economic Assoc, 2014 Broadway, Ste 305, Nashville, TN 37203, USA.

The news editors report that additional information may be obtained by contacting P. Ruh, University of Zurich, Ch-8001 Zurich, Switzerland.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1257/pol.20160076. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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