Research

Abstract: In 2001, Germany abolished public occupational disability insurance (ODI)---the second tier of its public DI system---for cohorts born after 1960. Using administrative data, we first document that, in the long run, overall DI inflows declined by roughly one-third. Second, using representative survey data, we document at best modest ODI insurance take-up responses in the private individual, risk-rated market, which lacks guaranteed issue. Third, an equilibrium model incorporating interactions between the public safety net, the first-tier public DI, and the private market reveals that coverage denials and weak insurance demand, driven by complementary social insurance, can explain the modest private ODI take-up response. Coverage gradients by income and health are thus substantial. Finally, counterfactual simulations highlight the limited scope of incremental reforms.

Abstract: We use the National Longitudinal Study of Adolescent to Adult Health to explore how high school peers' grit, a personality trait characterized by perseverance and passion, influences long-term outcomes approximately 15 years after high school. Exploiting random variation within schools across cohorts and the longitudinal nature of our data, we find that peer grit significantly increases future earnings by 4.2%, especially for students from disadvantaged backgrounds. This implies that peer grit may help bridge socioeconomic gaps. We uncover three potential channels through which peer grit affects long-term earnings: college enrollment, job alignment with long-term career goals, and increased resilience to difficulties. Additionally, peer grit leads to higher job satisfaction and asset accumulation. Thus, peer grit's effects extend beyond short-term educational performance and persist into adulthood.