A Microsimulation Analysis of the 2006 Regime Change in the Dutch Disability Scheme

Abstract

This paper introduces a microsimulation model that simulates the budgetary impact of the 2006 regime change in the Dutch disability scheme. A dynamic population model fits the case of the disability benefits the best. As opposed to macro forecasts, a microsimulation can answer questions about the individual or meso income effects, the exact distribution of expenses among different benefits and the time path of the savings. The introduction of the proposed system change decreases the number of disability benefits by more than 25% from 2020 onwards and reduces total costs by almost € 2 billion or 20%. Based on the better incentive structure, participation will increase and boost GDP. Microsimulation can be used to pick the winners and losers of the new system and give the time path of the savings. It is shown that for almost all partially disabled that are working, the total discounted income after the system change is as large as or larger than before the system change, for the non-working total discounted income is lower.

A microsimulation model to measure the impact of the economic crisis on household income

“…Along the same lines, an important body of microsimulation literature in the field of labour economics analyses the impact of income tax and welfare policies and reforms (see among others, Labeaga et al, 2008;Pestel and Sommer, 2013), and especially the evaluation of measures concerning the labour supply of different vulnerable groups, such as partially disabled workers (Van Sonsbeek and Gradus, 2006) or older workers (Li and O'Donoghue, 2011). Moreover, this method has been applied to estimate the elasticity of employment, unemployment and educational enrolment with respect to minimum wages or local labour market problems (see among others, Van Soest, 1994;Ballas et al, 2006).…”

Disability Benefit Microsimulation Models in the Netherlands

“…This paper uses the dynamic population microsimulation model that is currently in use for making the long-term budgetary forecasts of the disability schemes at the Dutch Ministry of Social Affairs and Employment. The model is originally described in Van Sonsbeek and Gradus (2006) and is developed for forecasting the effects of the introduction of the WIA. In this model, a sample of the disability stock is taken and samples of the most recent inflow cohort are added for each forecasted year.…”

Dutch policies towards ageing

“…This group's recommendations (the “Donner proposals”) were based on the premise that maintenance and use of available labour capacity should have the highest priority, and that the main responsibility for ensuring this rests with both employers and employees. In September 2003, the coalition agreement of the Balkenende cabinet I included a major regime change in disability insurance, mainly based on the Donner proposals [9]. The government intended to limit eligibility by tightening entry conditions and reducing benefit levels for the partially disabled.…”