Suppose That You Want to Determine the Extent to Which

question 12

Essay

Suppose that you want to determine the extent to which disability insurance (DI)prevents people's working who,in the absence of the program,would have worked.You do this by employing the cross-sectional regression analysis technique described in Chapter 3 and comparing the work histories of those receiving DI with those who are not receiving DI benefits,controlling for observable characteristics.
(a)Is this method likely to be sufficient? Explain.
(b)Bound (1989)studied the moral hazard of disability insurance by examining the employment histories of workers who applied for benefits but were denied them,and then comparing their employment with the employment records of individuals who received disability insurance benefits. (This is a quasi-experimental approach.)How does this approach compare with that described in part a?

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Definitions:

Article 2

Often refers to a specific section within a constitution or a part of a legal code dealing with a particular area, such as commercial transactions in the U.S. Uniform Commercial Code.

Genuine Assent

A true and voluntary agreement to enter into a contract, implying that all parties involved fully understand and agree to the terms.

Fraud

A deliberate trickery aimed at obtaining personal benefits or harming another person.

Duress

A situation where a person is forced or coerced into acting against their will through threats, pressure, or intimidation.