How disability insurance reforms change the consequences of health shocks on income and employment

Abstract

This paper examines whether Dutch disability insurance reforms have helped or hindered employment opportunities of workers that are facing unanticipated shocks to their health. An important component of the reforms was to make employers responsible for paying sickness benefits and to strengthen their sickness monitoring obligations. This may stimulate preventive and reintegration activities by firms. Using administrative data on hospitalizations, we conclude that both financial incentives and monitoring obligations have substantially lowered DI receipt and increased the employment of workers after a health shock.