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Sickness, Disability and Work: Breaking the Barriers (Vol. 3)

Denmark, Finland, Ireland and the Netherlands

image of Sickness, Disability and Work: Breaking the Barriers (Vol. 3)
Too many workers leave the labour market permanently due to health problems, and yet too many people with a disabling condition are denied the opportunity to work. This third report in the OECD series Sickness, Disability and Work explores the possible factors behind this paradox. It looks specifically at the cases of Denmark, Finland, Ireland and the Netherlands, and highlights the roles of institutions and policies. A range of reform recommendations is put forward to deal with specific challenges facing the four countries.

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The Individual's Perspective

Financial Incentives for Taking up Work

One of the main objectives of current disability benefit reforms in all four countries is to increase incentives for persons with disability to take up or to remain in work. Disability and other public benefits are an important source of income for people with disability, especially in lower income groups. While these benefits are particularly targeted in Ireland, they provide lower net replacement rates than in the other three countries. The design of these benefits in combination with income taxation can create work disincentives. Average effective taxation is high in all four countries and reaches 70% to 90% with a few exceptions. Different in-work benefit elements are operated to overcome this problem but are either too small in size (Finland), have a take-up problem (Ireland) or are effective only for higher-income groups (Netherlands).

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