Privatizing disability insurance


Seibold, Arthur ; Seitz, Sebastian ; Siegloch, Sebastian


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URN: urn:nbn:de:bsz:180-madoc-624710
Document Type: Working paper
Year of publication: 2022
The title of a journal, publication series: ZEW Discussion Papers
Volume: 22-010
Place of publication: Mannheim
Publication language: English
Institution: School of Law and Economics > VWL, insbes. Finanzwissenschaft u. Wirtschaftspolitik (Janeba)
Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
School of Law and Economics > VWL, Soziale Sicherung (Siegloch 2018-)
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: H55 , G22 , G52,
Keywords (English): disability insurance , privatization , welfare , microdata
Abstract: Public disability insurance (DI) programs in many countries face pressure to reduce their generosity in order to remain sustainable. In this paper, we investigate the welfare effects of giving a larger role to private insurance markets in the face of public DI cuts. Exploiting a unique reform that abolished one part of the German public DI system for younger cohorts, we find that despite significant crowding-in effects, overall private DI take-up remains modest. Private DI tends to be concentrated among high-income, high-education and low-risk individuals. We do not find any evidence of adverse selection on unpriced risk. Finally, we estimate individual insurance valuations via a revealed preferences approach, a key input for welfare calculations. We find that observed willingness-to-pay of many individuals is low, such that providing coverage partly via a private DI market improves welfare. However, we show that distributional concerns as well as individual risk misperceptions can provide grounds for justifying a full public DI mandate.

Dieser Eintrag ist Teil der Universitätsbibliographie.

Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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