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Nonparametric estimation of a compensating variation : the cost of disability

HANCOCK, Ruth
MORCIANO, Marcello
PUDNEY, Stephen
December 2013

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This paper proposes a nonparametric matching approach to estimation of implicit costs based on the compensating variation (CV) principle. The paper aims to introduce the matching approach, compare its properties with those of the conventional indirect parametric approach, and demonstrate its application in an important policy area. The authors apply the method to estimate the additional personal costs experienced by disabled older people in Great Britain, finding that those costs are substantial, averaging in the range £48-61 a week, compared with the mean level of state disability benefit (£28) or total public support (£47) received. Estimated costs rise strongly with the severity of disability. The authors compare the nonparametric approach with the standard parametric method, finding that the latter tends to generate large overestimates unless conditions are ideal, and recommend the nonparametric approach

ISER Working Paper Series, No. 2013-26

Disability pensions and social security reform : analysis of the Latin American experience

GRUSHKA, Carlos O
DEMARCO, Gustavo
2003

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This paper describes the disability pension arrangements prevailing in ten Latin American countries that reformed their pension systems. The analysis is limited to the topic of disability pensions, without attempting to evaluate other aspects such as accessibility.
Comparisons reveal that a wide variety of options for disability systems are possible. In the following sections general issues in the design of the disability-pension systems are identified

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