Early determinants of work disability in an international perspective

This paper studies the interrelated roles of health and welfare state policies in the decision to take up disability insurance (DI) benefits due to work disability (WD), defined as the (partial) inability to engage in gainful employment due to physical or mental illness. We exploit the large international variation of health, self-reported WD and the uptake of DI benefits in the US and Europe using a harmonized data set with life-history information assembled from SHARE, ELSA and HRS. We find that the mismatch between WD and DI benefit receipt varies greatly across countries. While objective health explains a substantial share of the within-country variation in DI, this is not the case for the variation across countries. Rather, most of the variation between countries and the mismatches are explained by differences in DI policies.