Exploiting a quasi-natural experiment and using administrative data, we examine the effects of the return-to-work policies' clawback regime in Disability Insurance (DI) programs on beneficiaries' labor supply decisions, allowing them to collect reduced DI payments while working. We compare two...

How important are adjustment costs for individuals when they face a change in work incentives induced by a policy change? I provide the first estimate of heterogeneous adjustment costs by exploiting a policy change that substantially increased work incentives. The policy change increased the...