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Labour Market Screening and the Design of Social Insurance

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How do firms’ screening incentives impact the design of social insurance programs, and could an optimal combination of disability insurance and firm subsidies reduce labor market distortions while increasing welfare?

Image courtesy of interviewee. October 31, 2024

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This video summarizes a study evaluating social insurance programs, particularly focusing on how they impact employers in the labor market and the incentives for hiring individuals affected by negative labor market shocks, such as disabilities. The research highlights that while social insurance programs like disability and employment insurance aim to protect workers, concerns exist that they may distort work incentives for individuals and affect employers' hiring decisions.

The study emphasizes the importance of addressing employer-side incentives, such as the tendency for firms to screen out individuals with disabilities due to perceived risks. By doing so, the paper argues that this can exacerbate labor market risks faced by these workers, reducing their employment opportunities and worsening outcomes.

The authors propose that integrating employer-side policies, such as subsidies for hiring people with disabilities, can mitigate the negative effects of these screening practices. They argue that a combination of more generous disability insurance and employer subsidies would improve labor market performance and enhance social welfare. Traditional designs of disability insurance typically focus on worker incentives, but this study urges that a focus on employer behavior is equally crucial.

Additionally, the paper suggests that similar challenges exist for other marginalized groups in the labor market, such as single parents, where targeted subsidies could promote better employment outcomes and overall inclusivity. The conclusions call for more quantitative analysis to better understand the dynamics between workers and employers, aiming to inform more comprehensive and effective social insurance policies.

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1. **Evaluation of Social Insurance Programs**: The study focuses on the performance and design of social insurance programs, particularly examining how they influence employer behavior in the labor market and affect workers facing negative shocks, such as disabilities.

2. **Employer Screening Incentives**: The paper discusses how employers may avoid hiring individuals with disabilities due to perceived risks, exacerbating the labor market challenges these individuals face. This behavior is linked to the employers' goals of maximizing profits and their methods of designing employment contracts.

3. **Integration of Employer-Side Policies**: The research argues for the necessity of addressing employer-side factors, such as providing subsidies to encourage the hiring and retention of disabled workers, rather than solely focusing on worker-side adjustments to social insurance programs.

4. **Dual Approach for Better Outcomes**: It emphasizes the need for a combined approach that includes more generous disability insurance alongside subsiding employers to hire individuals with disabilities, thus reducing the incentive for employers to screen out these workers and improving labor market dynamics.

5. **Quantitative Analysis for Policy Improvement**: Through quantitative modeling and analysis, the study concludes that reforming U.S. disability policies to include more employer-side interventions could enhance labor market efficiency and improve overall social welfare, suggesting the potential applicability of these findings to other social insurance scenarios.

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Certainly! Here are some key quotes and ideas extracted from the video, which discuss the evaluation of social insurance programs and their impact on the labor market:

1. **Purpose of Social Insurance Programs**:
- "Social insurance programs like disability insurance, employment insurance, or health insurance, are designed to protect the workers who are hit, who are affected by some labor, negative labor market shocks."

2. **Concerns Over Work Incentives**:
- "There are concerns that this type of social insurance programs may distort the work incentive or the incentive to participate in the labor market."

3. **Role of Employers**:
- "It is equally important to think about how firms respond to people who are affected by these shocks, including their incentive to hire and retain these workers."
- "We focus on the role of the employers, screening activities or screening incentives."

4. **Screening and Hiring Bias**:
- "Employers may have an incentive to screen out, or avoid hiring, people who are experiencing certain shocks like disability shocks."

5. **Labor Market Risks**:
- "Such screening activities could harm the labor market for disabled workers or even for moderate disabled workers."

6. **Integration of Employer and Worker Incentives**:
- "Addressing these firm-side incentives is essential to more efficient social insurance programs, less than just addressing worker-side forces."

7. **Benefits of Subsidizing Employers**:
- "Subsidizing firms to hire those with disabilities can reduce the firm's incentive to screen out these workers, leading to better outcomes in the labor market."

8. **Disability Insurance and Labor Market Dynamics**:
- "More generous disability insurance could potentially lower people’s incentive to work or return to work, reducing labor force participation among those workers."

9. **Contribution of Employer-Side Policies**:
- "US disability policies can be significantly improved by expanding the use of employer-side policies, particularly subsidizing firms to hire people with disabilities."

10. **Optimal Design of Disability Programs**:
- "The optimal structure consists of more generous firm-side policies, more generous disability insurance, and more use of firm-side subsidies."

11. **Potential for Broader Applications**:
- "Our findings highlight the potential of these approaches in other convideos like social insurance programs or social welfare programs."

These quotes encapsulate the main themes and arguments of the video, touching upon the complexities of social insurance, the role of employers in the labor market, and the interplay of incentives for both workers and employers.

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Here are some articles and research papers that share similarities with the video, focusing on the design and effects of social insurance programs, labor market dynamics, and the impact of employer incentives on job opportunities for individuals with disabilities:

1. **"The Impact of Disability Insurance on Labor Force Participation: Evidence from the U.S."** - This research examines how disability insurance affects labor force participation rates for individuals with disabilities and the implications for labor market outcomes.

2. **"Employer Attitudes and Disability: Blind Spots in the Labor Market"** - A study exploring how employers’ perceptions and attitudes towards disabilities influence hiring decisions, potentially leading to discrimination against individuals with disabilities.

3. **"Adverse Selection and Labor Market Discrimination: A Model of the Impact of Disability Insurance"** - This paper discusses the interplay between disability insurance programs and employer hiring practices, analyzing how insurance benefits might lead employers to screen out potential hires with disabilities.

4. **"Social Insurance and Labor Market Outcomes: Evaluating Disability Policies"** - An analysis of how various social insurance policies, particularly disability insurance, affect labor market dynamics, worker motivation, and employer behavior.

5. **"The Economics of Disability Insurance: A Behavioral Perspective"** - This research looks at the economic theories behind disability insurance and how these programs can be structured to better support both workers and employers without distorting labor market incentives.

6. **"Labor Market Discrimination and the Effects of Disability Insurance: Evidence from a Natural Experiment"** - This study uses a natural experiment to investigate the effects of disability insurance on discrimination in the labor market and how it affects employment opportunities for disabled individuals.

7. **"Policy Responses to Disability in the Labor Market: A Comparative Study"** - A comprehensive review of how various countries address the challenges faced by disabled workers in the labor market through policy interventions.

8. **"Subsidizing Employment for People with Disabilities: A Policy Analysis"** - This paper evaluates the effectiveness of government subsidies aimed at incentivizing employers to hire individuals with disabilities and the resultant impact on the labor market.

9. **"Flexible Work Arrangements for Workers with Disabilities: Innovations and Challenges"** - An exploration of how flexible work arrangements can be developed to accommodate employees with disabilities and how these innovations impact employer hiring practices.

10. **"The Role of Employer Incentives in the Employment of Disabled Persons"** - A discussion on how different types of employer incentives can promote or hinder the employment of individuals with disabilities in various sectors.

These articles address various aspects of the relationship between social insurance programs, disability, and labor market dynamics, paralleling the themes discussed in your video.

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In our study, we evaluate the performance

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and the design of the social insurance programs

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by focusing on the load of employers in the labor market.

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So social insurance programs like disability insurance,

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employment insurance,

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or health insurance, are designed to protect the workers

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who are hit, who are affected by some labor,

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negative labor market shocks, like disability shock

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and so on in the economics.

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Um, there has been a lot of research understand, trying

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to understand, the effect of social insurance

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or labor market to particularly the people are concerned

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that this type of social insurance programs may,

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distort, the, the people's, work incentive

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or the incentive to participate in labor market.

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But it is also equally, important to think about

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how firms were employer in the labor market, left

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or respond to other people who are affected by these shocks.

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So, particularly whether the question is whether they have

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incentive to hire and retain, these workers.

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And in our paper, we focus on the,

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role of the employers, screening activities

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or screening incentives specifically.

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Uh, we consider that pharma may have incentive

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to screen out,

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or avoid hiring, the, the people who are experiencing,

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certain shocks like disability shocks, if indeed,

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the firm engaging this type of the screening activities.

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And it can potentially exaggerate a labor market risk

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that actual worker face

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because maybe the people

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who are experiencing the disabilities have a more,

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more difficulties in return to work and job quickies,

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or they may have more difficulty in finding

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the more appropriate jobs.

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In the context of a us, disability policies,

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we argue both theoretically

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and empiric, that addressing these farm side incentive,

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is crucial in designing the more effective

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or more efficient social insurance programs.

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Less than just addressing, worker side forces.

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Uh, it's essential to integrate

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with an employer side forces such as subsiding farm

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to hire those people

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or retain these people like with disability, for example.

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And then this intervention can reduce the firm's incentive

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to, like screening, screening out these workers

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and also potentially contribute to the,

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the better in outcome in the labor market.

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Moreover, facilitating the access

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to the good employment opportunities,

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can also,

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Like, address,

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the issues arising from the work disincentive effect of,

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the, this so worker side social insurance programs and

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consequently that it can potentially provide,

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better like overall social insurance systems

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and also the, contribute

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to the better design labor market.

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And particularly in the context

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of the use disability process.

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We find that more, genius disability insurance, coupled

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with more use of, the,

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subsidizing firm to hire the people

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with disability can generate

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the better labor market, performance.

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And at the same time, it achieve the better social

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welfare in our paper.

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Um, we focus on the possibilities that,

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farm may design, the employment contract,

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to avoid, a attracting the people with disabilities

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so that we are, you know,

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thinking about the one possible way that,

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from actually engaging in the, labor market screenings.

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So we are thinking that like employment contract usually

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consists of the wage, wage and knowledge benefit.

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And we think that like, employer can potentially design,

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like, for example, like a non wage benefit risk appealing

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to the people with disability, for example,

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providing less flexibilities in their job or,

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or less accommodating this type of workers.

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And then this behavior will be potentially, like a

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concerning because it can potentially exaggerate

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the labor market risk or, that worker

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and face, coming from this disability shocks.

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And also, would be a fundamental problem

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for designing social insurance programs.

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And to explore the impact of this type

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of screening contract, we develop,

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equivalent labor search models that integrate the firm's,

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screening contract.

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The workers, disability shocks

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and also, ledge benefit are a tool for the screenings,

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equip labor search models, often also known

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as the such matching model of the labor market.

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It's now considered as a workforce,

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the model of the labor market.

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And one of its strengths is that, its ability for us

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to study employers to behaviors in the labor market.

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And the two study, the issue related

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to the disabilities.

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We consider that the workers may be subject

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to the disability shocks,

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which can negatively impact their labor productivity,

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and also it may change the preference on the type

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of job they want to work.

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Workers are applying the job, which may consist

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of like a wage and know wage benefit.

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We particularly think that people with disability prefer

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to work a job which provide, more flexibility, such as,

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you know, the providing the option to these work hours,

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partly because maybe these workers need to stay at home

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or they may need to go to hospital more often.

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And on the labor demand side, we consider

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that farms design the, wage and,

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and knowledge benefit to adopt workers.

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And then they do so by maximizing, maximizing their profit.

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We consider that, well, we assume that,

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farm cannot like discriminate explicitly based on the,

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the workers, you know, disability status.

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And then this is based on, this is based on the fact

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that in the country, like in many countries,

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there are anti-discrimination like regulation

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regarding the disabilities.

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In the case of the us this is called American

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with Disability Act.

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So the farm cannot expressly discriminate based on like a

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disability status regarding the hiring or firing

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or choice design of the compensations.

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In such an environment,

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what farm can potentially do is design their employment

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contract is appealing to attract the worker

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with disabilities, particularly if they don't want

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to hire, these workers.

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And this may happen through the, the, the, you know,

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less, you know, at other less problems of job.

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They may make the job less flexible

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or they may less likely to accommodate.

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And then the issue is that, like this type of,

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the behavior could potentially distort labor market outcome

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because eventually in the economy, four, it may generate

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in problems of some important gene flexibilities,

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or it could generate some over concentrations of,

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of the less, disabled workers in the labor forces.

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The key insight, from our model is that such,

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from screening activities could harm the labor market

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by, you know, negatively impacting even for less,

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disabled workers or even for moderate disabled workers.

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And this has an important implication for the labor market.

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Uh, so sorry, the, this has an important implication

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for the social insurance program designs.

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And by understanding these distortions,

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policymaker can design the better targeted employer side,

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you know, policy, policies like a subsidies

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or they can potentially incentivize farm to pro,

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provide those non wage benefit, non wage benefit more,

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and that can potentially mitigate, this efficiency

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and ultimately improving labor market performance.

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I think traditionally that, you know, literature

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of the public finance thinks that optimal design

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of the disability insurance programs

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Is determined by two factors.

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First factor is its insurance benefit, which is mainly

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through the provision of the adequate income support

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for the people with disabilities.

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The second channel is it's work incentive effect.

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The particularly, we concerned, we are concerned

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that more generous disability insurance could,

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lower the people's incentive to work

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or return to work, which lower the labor force participation

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of the those workers and,

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and also causing some excessive government expenditures.

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In this paper, we've argued

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that they're one additional factor we need

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to think about in designing these programs, which is,

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its its effect on the farm screening incentives.

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So that the point is that,

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more genius disabled insurance programs could potentially,

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make, the people

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with very severely disabled workers, are more likely

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to take up those, disability interest benefit, and

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therefore they're more likely not apply for a job

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from the perspective of the firm.

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Then they actually, they, they don't really need

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to engage in like a screening activities.

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The cons, this can potentially improve the employment

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contract or even for the moderate disabled workers

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or even for less disabled workers.

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Now, ultimately the potentially, you know,

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improving labor market allocations.

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So this kind of suggests

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that there are some potential benefit

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of expanding the ations, programs in, in thinking about,

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you know, labor market impact.

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Now that we need to think, how about, you know,

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the key trade off, as I said, like, one, like the,

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possible caveat of expanding the DIS programs is

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that it can work, this incentive effect

199
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and such a work is, is work is incentive effect.

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It'll be a more severe,

201
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it is more challenging for government.

202
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So particularly if government cannot like really observe

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who is like a more severely disabled

204
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or who is a moderately disabled or who can actually work.

205
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So, so based on that, we can actually cons,

206
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we can actually conclude our framework that the,

207
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using the disability insurance program alone is unlikely

208
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to be, you know, satisfactory in addressing these two

209
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type of the infancy

210
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or problems, which is the pharmac screenings problem

211
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and also the work disincentive effect.

212
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Instead, the, our framework suggests data,

213
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one additional complementary policies, which is a subsidy

214
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for farm to hire these workers.

215
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This type of the, the policy can work as just a,

216
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just typical hiring subsidy, which can act as, subsidy

217
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for farm to provide more known wage benefit.

218
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And that kind of push can

219
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Mitigate, that this work disincentive effect as well

220
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because job can be more attractive.

221
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And at the same time, this can also, you know,

222
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address the concerns about like a pharmac

223
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screening activity as well.

224
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So we think that the combina possible combination

225
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of this type of approach could lead to the, you know,

226
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more efficient labor market, you know,

227
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allocation while providing the possibly better

228
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insurance scheme.

229
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And one important lesson we run from our exercise is that

230
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given this kind of trade off, I I mentioned

231
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optimal like design

232
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or more efficient, the design of the disability process

233
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require more quantitative analysis,

234
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and particularly we need to know about how worker respond,

235
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and also we need to know about how employer respond.

236
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So we need some kind of like a more, quantitative,

237
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you know, approach to actually discipline about,

238
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both side of their response

239
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or their interaction in the labor market,

240
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which is more challenging than the typical like,

241
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like, analysis in this context

242
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where there are people are mainly focusing on

243
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labor surprise side response.

244
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Some of the key risks

245
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or key finding from our exercise is that

246
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US disability policies can be significantly improved

247
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by expanding the use of, employer side policies.

248
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So particularly subsidizing farm to hire people

249
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with disability or subsidizing farm

250
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to provide knowledge benefit like the

251
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option to reduce work hours.

252
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And this type of approach is currently very limited in the

253
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US compared

254
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with severe European countries which have more robust

255
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or large scale like farm side programs.

256
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We opt this conclusion, by,

257
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using the quantitative version of our Caribbean model

258
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that I explained, and,

259
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and importantly that, we make actually a number

260
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of the efforts to make that our quantitative analysis,

261
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you know, convincing and incredible.

262
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For example, we expressly incorporate a realistic feature

263
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of the US D forces like America with Disability Act

264
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or, disability insurance programs,

265
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or several kind form

266
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of the employer side subsidies into our

267
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equivalent framework.

268
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And also, we show some descriptive evidence that,

269
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the, the model seem to, explain well about number

270
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of the data patterns.

271
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For example, we find that people,

272
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with disabilities are more likely to so into job,

273
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which provide, more option to release work hours.

274
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And we also find some evidence that farm may use this,

275
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knowledge benefit, like a option to release work hour

276
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as a possible tool to screen other people with disabilities.

277
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And then we kind of estimate our model to account for a lot

278
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of the, standard fact regarding the relationship

279
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between the workers' disability status

280
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and labor market outcomes, including the employment

281
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and know wage benefit and wage and so on.

282
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Moreover, to improve the credibility, we even,

283
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conduct some, model variation showing

284
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that the model is able to generate reasonable,

285
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or realistic, response of,

286
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realistic labor surprise response,

287
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of the disability insurance.

288
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And after we are confident about, you know, models ability

289
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to make some quantitative conclusions, we stimulate,

290
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the different configuration of the policies, to search

291
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for the what would be the best mix of the policies.

292
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And according to our analysis, the optimal structure,

293
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consist of more generous, farm side,

294
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more genius, disability insurance.

295
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And together with more use of the farm side subsidies

296
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and such approach, lead to significant welfare gain,

297
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which is about 2% of the worker, you know, consumption.

298
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So that means the workers' consumption can include increase

299
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by the 2%, the major other kind of Wayfair, you know,

300
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benefit of this type of approaches.

301
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And moreover, it improve the labor market allocation.

302
00:16:19.375 --> 00:16:21.875
And the key mechanism behind this result is

303
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that the farm services reduce the incentive of the farm

304
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to screen the, the, workers,

305
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and at the same time,

306
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it address the work disincentive effect arising from the

307
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more genius, disability insurance programs.

308
00:16:38.395 --> 00:16:41.935
So consequently, the government can further expand,

309
00:16:41.935 --> 00:16:44.795
disability insurance programs, and,

310
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and as a result, the society can provide a better insurance

311
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against the disabilities,

312
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and at the same time it can achieve the,

313
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the better labor market, you know, efficiency.

314
00:16:55.135 --> 00:16:59.275
So we think that our finding have a on the welfare benefit

315
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of integrations of the farm side policies, with,

316
00:17:04.465 --> 00:17:07.035
more disability insurance, programs.

317
00:17:07.225 --> 00:17:11.635
Yeah, yeah. Um, highlight the potential of this type

318
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of approaches in other context like social,

319
00:17:14.575 --> 00:17:16.275
in other social insurance programs

320
00:17:16.295 --> 00:17:20.165
or social welfare programs, for example,

321
00:17:20.745 --> 00:17:24.725
we consider that people with some, caring

322
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responsibilities such as a single parent

323
00:17:28.545 --> 00:17:32.325
may face similar labor market challenge in the sense that

324
00:17:33.035 --> 00:17:36.925
they need to work a job which provide more flexibilities.

325
00:17:38.585 --> 00:17:42.685
And also we consider that farm often passive, that this type

326
00:17:42.685 --> 00:17:46.245
of worker is less profitable in the sense

327
00:17:46.275 --> 00:17:48.485
that maybe this type of workers are more likely

328
00:17:48.545 --> 00:17:49.685
to quit the job soon.

329
00:17:50.105 --> 00:17:52.085
So they may more likely to, you know,

330
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avoid hiring these type of workers.

331
00:17:56.065 --> 00:17:59.085
If this type of the screening incentive is actually indeed

332
00:17:59.445 --> 00:18:03.285
relevant mm-Hmm, then we consider that, subsidizing farm

333
00:18:03.825 --> 00:18:07.245
to hire and retain these type of the workers maybe

334
00:18:07.245 --> 00:18:10.005
through the subsidizing the parental key.

335
00:18:10.165 --> 00:18:14.125
Parental, for example, would, be,

336
00:18:14.125 --> 00:18:15.205
welfare enhancing

337
00:18:15.665 --> 00:18:18.725
and also it can potentially improve the effectiveness

338
00:18:18.785 --> 00:18:21.245
of the welfare programs which often target

339
00:18:21.385 --> 00:18:22.885
and support these type of the peoples.

340
00:18:23.585 --> 00:18:27.805
Indeed, we are known that many of these programs are strike

341
00:18:28.105 --> 00:18:31.645
to the, achieve the right balance of providing,

342
00:18:31.675 --> 00:18:35.405
appropriate support, for those, people.

343
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Uh, and also providing a good work incentive

344
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by offering the, targeted firm subsidies.

345
00:18:42.775 --> 00:18:45.475
We can create more inclusive labor market

346
00:18:46.415 --> 00:18:47.955
and also achieve the,

347
00:18:48.215 --> 00:18:50.355
or, the better, you know, design

348
00:18:50.355 --> 00:18:51.635
of the welfare programs.

349
00:18:51.895 --> 00:18:52.995
We hope that,

350
00:18:53.335 --> 00:18:58.155
our paper can potentially stimulate further interest on,

351
00:18:58.475 --> 00:19:00.075
discovering the lower employers

352
00:19:00.775 --> 00:19:02.675
or interaction between the work

353
00:19:02.695 --> 00:19:05.705
and farm as a crucial factor.

Evaluating Social Insurance and Employer Dynamics

00:00:00 - In our study, we evaluate the performance and the design of the social insurance programs by focusing on the load of employers in the labor market. So social insurance programs like disability insurance, employment insurance, or health insurance, are designed to protect the workers who are hit, who are affected by some labor, negative labor market shocks, like disability shock and so on in the economics.

00:00:34 - to understand, the effect of social insurance or labor market to particularly the people are concerned that this type of social insurance programs may, distort, the, the people's, work incentive or the incentive to participate in labor market. But it is also equally, important to think about how firms were employer in the labor market, left or respond to other people who are affected by these shocks.

00:01:08 - incentive to hire and retain, these workers. And in our paper, we focus on the, role of the employers, screening activities or screening incentives specifically. we consider that pharma may have incentive to screen out, or avoid hiring, the, the people who are experiencing, certain shocks like disability shocks, if indeed,

Enhancing Labor Market Outcomes for Disabled Workers

00:01:42 - And it can potentially exaggerate a labor market risk that actual worker face because maybe the people who are experiencing the disabilities have a more, more difficulties in return to work and job quickies, or they may have more difficulty in finding the more appropriate jobs. In the context of a us, disability policies, we argue both theoretically and empiric, that addressing these farm side incentive,

00:02:14 - or more efficient social insurance programs. Less than just addressing, worker side forces. it's essential to integrate with an employer side forces such as subsiding farm to hire those people or retain these people like with disability, for example. And then this intervention can reduce the firm's incentive to, like screening, screening out these workers

00:02:45 - the better in outcome in the labor market. Moreover, facilitating the access to the good employment opportunities, can also, Like, address, the issues arising from the work disincentive effect of, the, this so worker side social insurance programs and consequently that it can potentially provide, better like overall social insurance systems

Enhancing Labor Market Performance through Disability Insurance

00:03:18 - to the better design labor market. And particularly in the context of the use disability process. We find that more, genius disability insurance, coupled with more use of, the, subsidizing firm to hire the people with disability can generate the better labor market, performance. And at the same time, it achieve the better social welfare in our paper. we focus on the possibilities that,

00:03:53 - to avoid, a attracting the people with disabilities so that we are, you know, thinking about the one possible way that, from actually engaging in the, labor market screenings. So we are thinking that like employment contract usually consists of the wage, wage and knowledge benefit. And we think that like, employer can potentially design, like, for example, like a non wage benefit risk appealing

00:04:22 - providing less flexibilities in their job or, or less accommodating this type of workers. And then this behavior will be potentially, like a concerning because it can potentially exaggerate the labor market risk or, that worker and face, coming from this disability shocks. And also, would be a fundamental problem for designing social insurance programs.

Disability Shocks and Labor Market Dynamics

00:04:54 - of screening contract, we develop, equivalent labor search models that integrate the firm's, screening contract. The workers, disability shocks and also, ledge benefit are a tool for the screenings, equip labor search models, often also known as the such matching model of the labor market. It's now considered as a workforce, the model of the labor market. And one of its strengths is that, its ability for us

00:05:30 - And the two study, the issue related to the disabilities. We consider that the workers may be subject to the disability shocks, which can negatively impact their labor productivity, and also it may change the preference on the type of job they want to work. Workers are applying the job, which may consist of like a wage and know wage benefit. We particularly think that people with disability prefer

00:06:01 - you know, the providing the option to these work hours, partly because maybe these workers need to stay at home or they may need to go to hospital more often. And on the labor demand side, we consider that farms design the, wage and, and knowledge benefit to adopt workers. And then they do so by maximizing, maximizing their profit. We consider that, well, we assume that,

Disability Regulations and Labor Market Dynamics

00:06:35 - the workers, you know, disability status. And then this is based on, this is based on the fact that in the country, like in many countries, there are anti-discrimination like regulation regarding the disabilities. In the case of the us this is called American with Disability Act. So the farm cannot expressly discriminate based on like a disability status regarding the hiring or firing

00:07:05 - In such an environment, what farm can potentially do is design their employment contract is appealing to attract the worker with disabilities, particularly if they don't want to hire, these workers. And this may happen through the, the, the, you know, less, you know, at other less problems of job. They may make the job less flexible or they may less likely to accommodate.

00:07:37 - the behavior could potentially distort labor market outcome because eventually in the economy, four, it may generate in problems of some important gene flexibilities, or it could generate some over concentrations of, of the less, disabled workers in the labor forces. The key insight, from our model is that such, from screening activities could harm the labor market

Enhancing Labor Market Outcomes for Disabled Workers

00:08:09 - disabled workers or even for moderate disabled workers. And this has an important implication for the labor market. so sorry, the, this has an important implication for the social insurance program designs. And by understanding these distortions, policymaker can design the better targeted employer side, you know, policy, policies like a subsidies or they can potentially incentivize farm to pro,

00:08:41 - and that can potentially mitigate, this efficiency and ultimately improving labor market performance. I think traditionally that, you know, literature of the public finance thinks that optimal design of the disability insurance programs Is determined by two factors. First factor is its insurance benefit, which is mainly through the provision of the adequate income support for the people with disabilities.

00:09:11 - The particularly, we concerned, we are concerned that more generous disability insurance could, lower the people's incentive to work or return to work, which lower the labor force participation of the those workers and, and also causing some excessive government expenditures. In this paper, we've argued that they're one additional factor we need to think about in designing these programs, which is,

Impact of Generous Disability Insurance on Employment Incentives

00:09:44 - So that the point is that, more genius disabled insurance programs could potentially, make, the people with very severely disabled workers, are more likely to take up those, disability interest benefit, and therefore they're more likely not apply for a job from the perspective of the firm. Then they actually, they, they don't really need to engage in like a screening activities.

00:10:15 - contract or even for the moderate disabled workers or even for less disabled workers. Now, ultimately the potentially, you know, improving labor market allocations. So this kind of suggests that there are some potential benefit of expanding the ations, programs in, in thinking about, you know, labor market impact. Now that we need to think, how about, you know, the key trade off, as I said, like, one, like the,

00:10:46 - that it can work, this incentive effect and such a work is, is work is incentive effect. It'll be a more severe, it is more challenging for government. So particularly if government cannot like really observe who is like a more severely disabled or who is a moderately disabled or who can actually work. So, so based on that, we can actually cons, we can actually conclude our framework that the,

Addressing Labor Market Challenges: Subsidies and Screening in Disability Insurance

00:11:18 - to be, you know, satisfactory in addressing these two type of the infancy or problems, which is the pharmac screenings problem and also the work disincentive effect. Instead, the, our framework suggests data, one additional complementary policies, which is a subsidy for farm to hire these workers. This type of the, the policy can work as just a, just typical hiring subsidy, which can act as, subsidy

00:11:51 - And that kind of push can Mitigate, that this work disincentive effect as well because job can be more attractive. And at the same time, this can also, you know, address the concerns about like a pharmac screening activity as well. So we think that the combina possible combination of this type of approach could lead to the, you know, more efficient labor market, you know, allocation while providing the possibly better insurance scheme.

00:12:24 - given this kind of trade off, I I mentioned optimal like design or more efficient, the design of the disability process require more quantitative analysis, and particularly we need to know about how worker respond, and also we need to know about how employer respond. So we need some kind of like a more, quantitative,

Enhancing US Disability Policies through Employer Incentives

00:12:53 - both side of their response or their interaction in the labor market, which is more challenging than the typical like, like, analysis in this context where there are people are mainly focusing on labor surprise side response. Some of the key risks or key finding from our exercise is that US disability policies can be significantly improved by expanding the use of, employer side policies. So particularly subsidizing farm to hire people

00:13:25 - to provide knowledge benefit like the option to reduce work hours. And this type of approach is currently very limited in the US compared with severe European countries which have more robust or large scale like farm side programs. We opt this conclusion, by, using the quantitative version of our Caribbean model that I explained, and,

00:13:55 - of the efforts to make that our quantitative analysis, you know, convincing and incredible. For example, we expressly incorporate a realistic feature of the US D forces like America with Disability Act or, disability insurance programs, or several kind form of the employer side subsidies into our equivalent framework. And also, we show some descriptive evidence that,

Enhancing Disability Employment Through Policy Optimization

00:14:27 - of the data patterns. For example, we find that people, with disabilities are more likely to so into job, which provide, more option to release work hours. And we also find some evidence that farm may use this, knowledge benefit, like a option to release work hour as a possible tool to screen other people with disabilities. And then we kind of estimate our model to account for a lot

00:14:57 - between the workers' disability status and labor market outcomes, including the employment and know wage benefit and wage and so on. Moreover, to improve the credibility, we even, conduct some, model variation showing that the model is able to generate reasonable, or realistic, response of, realistic labor surprise response, of the disability insurance.

00:15:28 - to make some quantitative conclusions, we stimulate, the different configuration of the policies, to search for the what would be the best mix of the policies. And according to our analysis, the optimal structure, consist of more generous, farm side, more genius, disability insurance. And together with more use of the farm side subsidies

Enhancing Labor Market Efficiency through Disability Insurance Reforms

00:16:02 - which is about 2% of the worker, you know, consumption. So that means the workers' consumption can include increase by the 2%, the major other kind of Wayfair, you know, benefit of this type of approaches. And moreover, it improve the labor market allocation. And the key mechanism behind this result is that the farm services reduce the incentive of the farm to screen the, the, workers,

00:16:31 - it address the work disincentive effect arising from the more genius, disability insurance programs. So consequently, the government can further expand, disability insurance programs, and, and as a result, the society can provide a better insurance against the disabilities, and at the same time it can achieve the, the better labor market, you know, efficiency. So we think that our finding have a on the welfare benefit

00:17:04 - more disability insurance, programs. Yeah, yeah. highlight the potential of this type of approaches in other context like social, in other social insurance programs or social welfare programs, for example, we consider that people with some, caring responsibilities such as a single parent may face similar labor market challenge in the sense that

Enhancing Labor Market Inclusivity through Targeted Subsidies

00:17:38 - And also we consider that farm often passive, that this type of worker is less profitable in the sense that maybe this type of workers are more likely to quit the job soon. So they may more likely to, you know, avoid hiring these type of workers. If this type of the screening incentive is actually indeed relevant mm-Hmm, then we consider that, subsidizing farm

00:18:07 - through the subsidizing the parental key. Parental, for example, would, be, welfare enhancing and also it can potentially improve the effectiveness of the welfare programs which often target and support these type of the peoples. Indeed, we are known that many of these programs are strike to the, achieve the right balance of providing, appropriate support, for those, people.

00:19:02 - by offering the, targeted firm subsidies. We can create more inclusive labor market and also achieve the, or, the better, you know, design of the welfare programs. We hope that, our paper can potentially stimulate further interest on, discovering the lower employers or interaction between the work and farm as a crucial factor.

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Line Height Adjustment

Cursor Size Adjustment

Page Structure Options

Page Structure