The Effect of plant downsizing on disability pension utilization
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Date
2005Metadata
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- Discussion Papers [1002]
Abstract
Abstract:
We investigate the impact of plant downsizing on disability pension utilization in Norway. Plant
downsizing substantially increases the disability entry rate of workers in affected plants. Workers
originally employed in plants that closed between 1993 and 1998 were 27.9 percent more likely to
utilize disability pensions in 1999 than comparable workers in non-downsizing plants. The effect of
downsizing is non-linear, with workers originally employed in plants downsizing 65-95 percent of their
workforce more likely to enter disability than workers in fully closing plants. This is consistent with the
signaling story of Gibbons and Katz (1991). We also estimate significant effects of downsizing on
future earnings and mortality, suggesting the increase in disability participation could be driven by an
adverse effect of downsizing on the economic opportunities or health of affected workers.
Keywords: disability, social insurance, downsizing, layoffs, plant closings
Publisher
Statistics Norway, Research DepartmentSeries
Discussion Papers;No. 435Related items
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