Disability benefits, replacement ratios and the labour market. A time series approach

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Abstract
In this paper, a study of factors affecting the number of disability beneficiaries in Norway is presented. Equations determining entry rates into the disability benefit system are estimated using aggregated time series data grouped by sex and age. Unemployment is found to influence disability entry. The results regarding effects of the replacement ratio are ambiguous. A model determining the number of beneficiaries, including the estimated entry equations is presented. The model is used to simulate the effect of counterfactual changes in exogenous variables on the number of disability beneficiaries.