Description:
This paper examines the effect of being granted temporary disability insurance (TDI), as opposed to a non-health related benefit, on later labor market outcomes of youths who are seeking temporary income support from the state. In Norway, there has been a development over time towards a more lenient screening to TDI, and this development has been more pronounced in some municipalities than in others. Using local screening leniency as an instrument for TDI receipt, I find that being granted TDI benefits significantly reduces later labor market attachment of youths whose benefit receipt would differ according to their municipality of residence, and the year of entry to the benefit system.