Social Support Shopping: Evidence from a RegressionDiscontinuity in Disability Insurance Reform

This paper examines how a change in the generosity of one social assistance programgenerates spillovers onto other social assistance programs. We exploit an age discontinuityin the stringency of the 1993 Dutch disability reforms to estimate the causal effect of exit fromdisability insurance (DI) on participation in other social assistance programs. We find strongevidence of “social support shopping”: 43 percent of those induced to leave DI due to thereform receive an alternative form of social assistance two years after the implementation ofthe reform. As a result, for each Euro saved in DI benefits, the government has to spend anextra 60 cents in other social assistance programs. This crowd-out rate grows from 60% to69% if we also take into account the response of the partners’ of those affected by the DIreform. The crowd-out effect declines over time, but is still 25% eight years after the reform....