[Fluctuations in unemployment and disability in Iceland 1992-2006]

To examine and explain the effect of unemployment on the number of disability pensioners in Iceland by examining changes in this relationship from 1992 to 2006.

Information on gender and place of residence of new recipients of disability pension in Iceland and corresponding information on unemployment for each year in the period 1992 to 2006. The variables were correlated and disaggregated by gender and regions within Iceland.

Two big fluctuations occurred in the rate of new disability pension receivers during the study period, with significant increases in disability from 1993 to 1995 and again from 2003 onwards. Both of these fluctuations are associated with considerable increases in the unemployment rate. The extent of new disability pensioners declined again when the level of unemployment went down, even though not to the same relative extent. In the upswing from 2003 a delay of about a year in the increase of disability pensioners' numbers, following the rise in unemployment rate, became more prominent and the overall rate of new disability pensioners reached new highs. The relationship applies equally to the capital area as well as the provincial areas as a whole. There is though a small deviation in three of the seven provincial areas, with less decline of the disability rate on the downswing.

Health and capability condition determine the overall disability rate, but fluctuations over time are related to environmental conditions in the labour market, especially the unemployment rate. The features of the welfare system, especially the benefit and rehabilitation system, as well as the extent and character of activation measures in the labour market also influence the number of disability pensioners. A new method of disability assessment from late 1999 may have had some influence on the relationship during the latter part of the period and increasing applications from people with mental and psychiatric deficiencies seems to have had a significant influence on the growing disability rate during the last few years.