| dc.description.abstract | This master’s thesis examines the impact of changes in local labour market conditions
on disability benefit take-up, particularly focusing on the 2014 oil price decline. Using
municipality-level data for Norway from 2009-2021, the study employs a Two-Stage Least
Squares methodology with instrumental variables to explore the relationship between
changes in employment and disability benefits. A Difference-in-Difference and Event Study
approach is applied to analyse the effects of the oil price decline in 2014 on disability
benefits. This event significantly affected employment in Norwegian municipalities with
a high dependence on the oil industry. By differentiating municipalities based on their
level of oil workers, I investigate if the municipalities most dependent on the oil industry
experienced a higher increase in benefit take-up compared to other municipalities postevent.
The Two-Stage Least Squares results reveal a significant inverse relationship between
employment levels and disability benefit take-up with an elasticity of -1.454. The findings
from the Difference-in-Difference and Event Study indicate that the decline in oil prices
in 2014 led to a more pronounced increase in benefit recipients in municipalities with
higher levels of oil workers, with a delayed effect that remained for several years after the
event. The results indicate that economic shocks to local economies can increase disability
benefits take-up. This suggests that for some individuals, disability benefits may function
as a substitute for employment during economic downturns. | en_US |
