Return-to-Work Policies for Disability Insurance Recipients: The Role of Financial Incentives

Abstract

Can financial incentives help disability insurance recipients return to work?

New research by Guida Ayza Estopà, Bart Cockx, Sébastien Fontenay, and Ilan Tojerow provides a nuanced answer. The study examines Belgian disability insurance recipients who already combine benefits with part-time work under the system of permitted work. As earnings rise, benefits are gradually withdrawn, increasing the implicit tax on work. Using administrative data and a regression kink design, the authors show that higher implicit taxation reduces the likelihood of remaining in part-time work. However, recipients do not all respond in the same way. Some return to full disability benefit receipt, while others move into full-time employment. These contrasting responses reflect differences in work capacity and preferences for work. The findings highlight that the design of financial incentives can influence whether partial work acts as a stepping stone toward full employment or a pathway back to benefit dependency. At a time when many countries are seeking to increase labour market participation among disability benefit recipients, the study offers important lessons for policy design.

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Ayza Estopà, G., Cockx, B., Fontenay, S., & Tojerow, I. (2026). Return-to-Work Policies for Disability Insurance Recipients: The Role of Financial Incentives. Maastricht University, Research Centre for Education and the Labour Market. ROA Research Memoranda No. 003.