We investigate behavioural responses to the generosity of Disability Insurance (DI) in a context where recipients can cumulate the benefit with an extensive quota of labour earnings. We use rich administrative data on the work and health histories of Italian private sector workers. We exploit a major social security reform that reduced the expected DI replacement rate, generating an income effect. To address unobserved heterogeneity and the unobservability of underlying disability, we study individuals impacted by acute cardiovascular shocks whose DI eligibility is plausible. Using a Regression Discontinuity in Time design, we identify a substantial DI response to benefit generosity, suggesting an elasticity of 1.26. The employment response is instead minor, and driven by immigrant workers. Our findings indicate that in an extensive earnings-cumulability setting, the receipt of DI is widely perceived as a complement to labour income. These results carry significant implications for the design of labour-inclusive DI schemes.
