Early Determinants of Work Disability in an International Perspective

Work disability is the (partial) inability to engage in gainful employment due to physical or mental illness, resulting in early retirement and/or uptake of disability insurance benefits. This study juxtaposes health measures of work disability (WD) with the uptake of disability insurance (DI) benefits in the US and Europe. It is based on an internationally harmonized data set assembled from SHARE, ELSA and HRS. Particular attention is given to life-time health using life history data from SHARE and ELSA plus comparable early childhood and life-course data from HRS. The core of the paper relates reported WD status and DI benefit receipt on country-specific DI, pension and labor market policies. We also evaluate the DI systems’ efficiency by comparing how well they provide benefits to individuals in need without being misused by individuals who are healthy. We find that while our large set of health measures explains a substantial share of the within-country variation in WD and DI, this is not the case for the variation across countries. Rather, most of the variation between countries is explained by differences in DI policies.