| Author/Presenter |
Laura Turner (University of British Columbia) |
| Co-author |
Giovanni Gallipoli (University of British Columbia) |
| Title |
Disability Policies for an Aging Workforce: A Household-Level Analysis |
| Abstract |
Using a collective model we study the household-level labour supply responses to disability shocks. We ask what are the effects of the onset of disability on households' work decisions and whether these effects differ substantially with household characteristics. Our work is structured in the following way: first, using Canadian data, we describe the observed incidence, persistence and consequences of disability on own and spousal labour supply as well as on the hazard of divorce. We compare evidence from subjective measures of work-limiting disability available in the 1996-2001 and 1999-2004 panels of the Survey of Labour and Income Dynamics with "objective self-reported" measures of disability available in the first six waves of the National Health and Population Survey. We then develop and estimate a dynamic collective household model without commitment for an economy consisting of one-person and two-person families. In keeping with recent empirical evidence from U.S. data, we assume that disability shocks have a direct "time-loss" effect as well as an indirect effect on individual productivity which depreciates due to reductions in the labour supply of disabled workers. Finally, we use our calibrated model to numerically simulate the consequences of three types of policy intervention: (1) temporary income support for disabled workers conditional on non-participation; (2) a permanent disability benefit received independently of future labour market behaviour; and (3) wage supplements to disabled workers in the form of a negative payroll tax. In all cases, we are interested in how these policy interventions affect the optimal own and spousal responses to disability onset, as well as aggregate male and female labour supply and household composition. |
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