Intergenerational spillovers in disability insurance
Anne Gielen, Associate Professor at Erasmus School of Economics, has written an article published by ESB. The goal of the paper is to explore how a parent’s reduction in disability insurances use affects their children’s choices. A 1993 policy reform in the Netherlands which tightened disability insurance is used in the paper to see if there is an intergenerational spillover effect.
According to Gielen, children respond strongly when a parent exits the disability insurance or has their benefits reduced. Children whose parents were exposed to the reform are less likely to participate in disability insurance themselves as adults, do not increase their participation in other public assistance programs, increase their earnings and taxes paid, and invest significantly more in their education.