Social Insurance and Labor Market Inclusion in Norway

Examples of research findings from this project: - The propensity to claim social insurance benefits is affected by claims among peers, such as neighbors and past classmates. The social interaction effects are larger for particular social insurance programs than for the overall use of social insurance. - Involuntary job loss implies a significant rise in the risk of becoming a disability insurance claimant. For men, job loss implies a doubling of the disability risk during the next four years, other things equal. For women, the risk rises with around 50 %. - The provision of partial unemployment benefits during periods of underemployed job search contributes to a reduction in the overall duration of benefit claim periods. Partial appears to represent a stepping stone toward full employment. - The timing of retirement does not seem to affect life expectancy. - Children of immigrants - are much more likely to leave school early than native children. However, the gap shrunk sharply over the past two decades and second generation immigrants are now rapidly catching up with the educational performance of natives. An important aim of this project has been to discuss the moral hazard problems related to current social insurance systems and to evaluate strategies for tradeoff between economic safety and work incentives. Based on a review of existing literature, as well as own research, we have proposed a reform of Norwegian social insurance institutions, whereby pure income insurance is replaced by employment insurance. The main ingredient in our proposal is to make disability insurances graded, implying that the public insurer only pays for the fraction of individuals? work capacity that is really lost due to the disability (which is typically far below 100 %), while requiring willingness to participating in the labor market with the remaining capacity. To ensure the supply of suitable jobs, we propose mechanisms ensuring that employers do not have to pay for more than the employees? true productivity. We also propose that the public sector acts as an employer of last resort.

The project aims at evaluating the empirical relevance of various disincentive effects generated by the Norwegian social insurance system, and to examine strategies for minimizing these effects by means of institutional design (e.g., activation schemes, c heck-points, monitoring, and gate-keeping). The key empirical strategy is to exploit random-assignment-like variation in non-experimental administrative data to identify the causal effects of interest. The project description identifies a number of policy -relevant research topics where we argue that this empirical approach is viable. For each research topic, we explain our basic identification strategy. The project also aims at initiating randomized controlled experiments to evaluate the impacts of altern ative social insurance regimes, particularly with respect to the timing of check-points and interventions. We emphasize that this approach requires consent and support from the appropriate authorities. While focusing on policy-relevant applications, the project has a strong methodological focus. Our ambition is to contribute significantly to methodological improvements in evaluation techniques built on non-experimental data. If randomized controlled trials are implemented, they will serve as a benchmark towards which the success of non-experimental evaluation techniques can be measured. The Research team comprises Professor Knut Røed, Professor Bernt Bratsberg, Professor Oddbjørn Raaum, and Simen Gaure, all experienced senior researchers at the Frisch Centre who regularly publish in scientific journals. It also comprises Professor Trond Petersen at the University of California, Berkeley. While the Frisch Centre researchers have their expertise in economics and mathematics, Petersen has his primary expe rtise in Sociology. The project will finance one Doctoral Student. The project also involves significant network activities, particularly with colleagues in Sweden and the United States.