Health, Disability Insurance, and Labor Force Exit of Older Workers in the Netherlands

In this chapter we examine to what extent the exit probability from the labor force can be explained by the provisions of the Disability Insurance (DI) program in the Netherlands. We disentangle DI eligibility from DI generosity effects. For this purpose we make use of three waves of the Dutch branch of the Survey of Health, Ageing, and Retirement in Europe, conducted in 2004, 2007 and 2011. We find no discernible impact of the level of disability benefits on the exit from employment, but restricting access to the DI scheme does affect labor force exit and increases, on average, the years people remain in employment until the age of 65. These findings suggest that if policymakers are interested in reducing the number of DI recipients, an alternative to reducing DI benefits for those who qualify for DI could be stricter medical screening of individuals who apply for DI.