Policy seminar: Employers Opting Out of Public to Private Disability Insurance: Selection or Incentive Effects?

Time: 13.00-14.00 hours
Location: CPB-office, Van Stolkweg 14, The Hague

Presentation: Pierre Koning (SZW/VU)

Discussant: Krista Hoekstra (CPB)

Language: English

Registration:  Please register by sending an email to polinars@cpb.nl.

Abstract subject:
This paper analyzes selection and incentive effects of opting out from public to private insurance on employer Disability Insurance (DI) inflow rates. We use administrative information on DI benefit costs and opting-out decisions of a balanced panel of about 140,000 employers that are followed between 2007 and 2011. We argue that the opting-out decision of employers was driven by current DI enrolment and anticipation effects that resulted from short-term expectations on DI costs. In particular, employers opted out when this was most rewarding for them in reducing DI premium rates. When controlling for these effects, our main finding is that there are no incentive effects due to opting out. That is, publicly and privately insured employers show similar DI inflow rates.

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