Fundamentally reforming the DI system: evidence from Germany

Cao, Yaming ; Fischer-Weckemann, Björn ; Geyer, Johannes ; Ziebarth, Nicolas R.

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URN:	urn:nbn:de:bsz:180-madoc-721477
Document Type:	Working paper
Year of publication:	2025
The title of a journal, publication series:	ZEW Discussion Papers
Volume:	26-006
Place of publication:	Mannheim
Edition:	November 21, 2025
Publication language:	English
Institution:	Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung School of Law and Economics > Arbeitsmärkte und Sozialversicherungen (Ziebarth 2022-)
MADOC publication series:	Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject:	330 Economics
Classification:	JEL: D14 , D82 , H53 , H55 , I14 , I18 , I48 , J14 , J26,
Keywords (English):	occupational disability insurance , individual private DI , coverage denials , risk rating , private information , adverse selection , social safety net
Abstract:	In 2001, Germany abolished public occupational disability insurance (ODI)-the second tier of its public DI system-for cohorts born after 1960. Using administrative data, we first document that, in the long run, overall DI inflows declined by roughly one-third. Second, using representative survey data, we document at best modest ODI insurance take-up responses in the private individual, risk-rated market, which lacks guaranteed issue. Third, an equilibrium model incorporating interactions between the public safety net, the first-tier public DI, and the private market reveals that coverage denials and weak insurance demand, driven by complementary social insurance, can explain the modest private ODI take-up response. Coverage gradients by income and health are thus substantial. Finally, counterfactual simulations highlight the limited scope of incremental reforms.
Additional information:	Verfasser auch: Fischer, Björn ; Fischer-W., Björn