Making Ends Meet on Disability Benefits: How Well Do Programs Decommodify?

Background and Purpose: Decommodification, or the ability to maintain a reasonable standard of living when one is unable to participate in the labor market due to a work-disability, is the principal objective of disability benefits programs. Prior research, however, has yet to fully investigate how well programs achieve this goal in the real world. This paper evaluates how well disability benefit programs decommodify by drawing on data that encompasses nine countries and two disability policy regimes.

Methods: Decommodification is examined along two dimensions, the restrictiveness and generosity of disability benefit programs, that mirror those put forward by Esping-Anderson (1990). Cross-sections from all available SHARE waves (1, 2, 4, 5, and 6) are analyzed providing nationally representative longitudinal samples of adults ages 50-65 in Denmark, Sweden, Germany, and Switzerland, Austria, Spain, Italy, France, and Belgium from 2004 to 2015 (N=72,000). To measure work-disability, we apply the functionality index of Mont and Loeb (2010), which consists of a latent index of functional ability closely linked to social model definitions of disability. We also examine two indicators of material hardship: the self-report of difficulty making ends meet and a composite index of 11 types of hardship.

Results: A first finding is that across all nine countries adults with work-disabilities have higher odds of receiving disability benefits than do adults without work disabilities [OR=17.804]. Adults in the Nordic countries, however, have greater odds of receiving disability benefits [OR= 27.522] than do adults with work-disabilities in Residual countries [OR=14.416]. Yet, a considerable percentage of adults with work-disabilities do not receive disability benefits (59% across the nine countries in 2015). Those who receive disability benefits are also associated with a statistically significant elevated risk of encountering deprivation. Across all available countries and years, the odds of experiencing deprivation are more than two times as large for a disability benefit recipient as the odds are for an individual who does not receive disability benefits [OR=2.318].

Conclusions and Implications: A first finding was that many adults with work-disabilities do not receive disability benefits. This suggests that disability benefits may be overly restrictive and difficult to access for those who the programs are designed to protect. Recalibrating benefit programs by introducing determination models that directly assess the capacity to work, rather than rely on functional and medical information as proxies for work-capacity, could improve the targeting of benefits. A second finding is that, when assessing living standards using two indicators of material deprivation, disability benefit recipients across the nine countries were shown to be more than twice as likely to experience deprivation. If disability benefit programs are to truly decommodify those with work-disabilities, they should provide access to entitlements that supplement lost wages and the extra costs of living with a disability. A robust research agenda on the decommodification function of disability benefit programs is needed to renew policy interest in achieving the underlying goal of disability benefit programs: to protect the standard of living of those with work-disabilities.