The 2001 pension reform in Germany substantially altered the public DI system, by changing the job-related eligibility criterion from “own-occupation” insurance to “any-occupation” insurance as well as reducing the generosity of the system. In response to the reform, the demand for private DI insurance, which still offers “own-occupation” insurance, has increased tremendously. In this project, I study how the demand for private insurance depends on the two main-policy margins of public insurance: Generosity and occupation-dependent eligibility.
To this end, I estimate a dynamic household model, based on public data (SIAB, EVS) and proprietary contract data of a major German insurance companies. With the results obtained from this estimation, I simulate the demand under different policy regimes, backing out the respective elasticities. I then plug those elasticities into a sufficient statistics model, which allows me to make some statements about welfare improving reforms.
Given the unique data requirements and the unique data set, I am the first one to study this question.