Disability Insurance (DI) programs have long been criticized by economists for apparent work disincentives. Some countries have recently modied their programs such that DI recipients are allowed to keep some of their benets if they return to work, and other countries are considering similar return-towork policies. However, there is little empirical evidence of the eectiveness of programs that incentivize the return to work by DI recipients. Using a local randomized experiment that arises from a

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... sharp discontinuity in DI policy in Norway, we provide transparent and credible identication of how nancial incentives induce DI recipients to return to work. We nd that many DI recipients have considerable capacity to work that can be eectively induced by providing nancial work incentives. We further show that providing work incentives to DI recipients may both increase their disposable income and reduce program costs. Our ndings also suggest that targeted policies may be the most eective in encouraging DI recipients to return to work.