Bíró Anikó, Elek Péter: Job loss, disability pension and health expenditures
Using individual level administrative panel data from Hungary between 2003-2011, we analyse the causal effect of job loss on disability pension utilisation on a five-year horizon. We look at individuals being displaced due to a mass layoff, and compare their labour force status to non-laid-off individuals with similar employment and health history, who were chosen with propensity score matching.
According to our estimates from discrete time hazard models, being laid off increases the transition probability to disability retirement by 60–90% (or 1-1.5 %points in 2-4 years). We find greater than average effect among women, the higher educated and those who were in worse health before.
Outpatient, inpatient and pharmaceutical expenditures increase to 3.5-4 times when a laid-off individual takes up disability pension, and decrease slightly afterwards, but do not reach the pre-disability levels. The time pattern of health expenditures around disability retirement is similar to those individuals who were not laid off but still became disabled. Overall, disability retirement of laid-off workers seems to be mostly the consequence of health shocks.