Take-up and labour supply responses to disability insurance earnings limits

The data used in this paper is under the own- ership of the Central Administration of National Pension Insurance, the National Health Insurance Fund Administration, the Educational Authority, the National Tax and Customs Administration, the National Labor Office, and the Pension Payment Directorate of Hungary. [...] Third, to the best of our knowledge this is the first paper to study a decrease in the earnings limit, which is important as the responses to positive and negative changes in the earnings limit are not necessarily symmetric. [...] The benefit level of the RSA was low compared to the disability pension: 36 to 38% of the statutory minimum wage throughout the years of our analysis. [...] To study how the reform lowering the earnings limit impacted the selection of beneficiaries into the RSA program and their labor supply conditional on participation, we compare beneficiaries who enter in 2007, the year before the reform (“old entrants”) and beneficiaries who enter in 2008, the year after the reform (“new entrants”).3 We follow these two groups of beneficiaries for 4 years (48 mont. [...] The pre-entry labels show the mean of earnings relative to the monthly minimum wage during the period between four years to one year (months -48 to -13) before entering RSA and the post-entry labels show the mean of earnings relative to the monthly minimum wage during the period between one and three years (months 13 to 36) after entering RSA.