Disability risk, disability benefits, and equilibrium unemployment

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8 Citations (Scopus)


This paper analyses the labour market and efficiency effects of various kinds of disability policies. It therefore extends Pissarides (1990) model of equilibrium unemployment with disability risk and disability benefits and allows for the improper use of disability schemes by the unemployed. The paper finds that recognition of this improper use can reverse the ranking of policies. In addition, it concludes that disability policies that reduce the participation in disability schemes tend to increase the rate of official unemployment. Only policies that lower the rate of disability shocks succeed to reduce both the participation in disability and unemployment schemes.
Original languageEnglish
Pages (from-to)219-244
JournalInternational Tax and Public Finance
Publication statusPublished - 2001
Externally publishedYes


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