From the National Bureau of Economic Research
We analyze different disability policy strategies using policy scores developed by the OECD for the period 1990 to 2007. Applying model-based and hierarchical agglomerative clustering, we investigate the existence of distinct country clusters, characterized by particular policy combinations. In spite of common trends in policy re-orientation, our results indicate that the reforms of the last two decades led to more, not less, heterogeneity between country groups in terms of sickness and disability policy. A set of Northern and Continental European countries emerges as a distinct cluster characterized by its particular combination of strong employment-oriented policies and comparatively high protection levels. A qualitative review of policy changes in the most recent years suggests that the gap between these countries and the rest might have further increased. We embed our empirical analysis in a theoretical framework to identify the objectives and the main components of a comprehensive disability policy strategy. The objectives of such a strategy can be subsumed under three headings, representing strategy pillars: prevention and treatment; protection and insurance; and activation and re-integration. Not all these dimensions are covered equally well by the OECD policy scores and will have to be further investigated.
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