Municipality-level differences in disability retirement in Finland: The contribution of local social characteristics

Abstract

Aims:

Large differences exist in the risk of disability retirement between Finnish municipalities. This study examined whether individual-level and municipality-level characteristics explain these differences and which municipality-level characteristics are particularly important for the risk of disability retirement.

Methods:

Individual-level register data were supplemented with 10 municipality-level characteristics from various databases. A 20% sample of the Finnish population (N=626,391) was followed for transition to disability retirement from 2016 to 2019 using multilevel Weibull models.

Results:

Of the total variation in the risk of disability retirement, 4.3% was attributed to the municipal-level and decreased to 1.8% when individual-level characteristics (gender, age, education level and entitlement to special reimbursement for medical expenses, reflecting morbidity) were controlled for. Further adjustment for municipality-level characteristics fully erased the differences between municipalities. The proportion of municipality-level variation was larger for disability retirement due to somatic illnesses than mental disorders. Of the municipality-level characteristics, socioeconomic structure, unemployment rate, poverty, net migration between municipalities, dependency ratio, the amount of tax revenue per capita and morbidity were associated with the risk of disability retirement.

Conclusions:

The municipality-level variation in the risk of disability retirement is largely explained by the individual characteristics of the inhabitants. However, various characteristics of the municipalities show associations with the risk of disability retirement. Recognizing such factors is essential for shaping policies that mitigate disability retirement risk.