Academic Commons

Reports

The Employment Effects of Social Security Disability Insurance in the Past 25 Years

Wachter, Till von; Song, Jae; Manchester, Joyce

We use administrative longitudinal data on earnings, impairment, and mortality to replicate and extend Bound's seminal study of rejected applicants to federal Disability Insurance (DI). We confirm Bound's main result that rejected older male applicants do not exhibit substantial labor force participation. We show this result is stable over time, robust to more narrow control groups, and similar within gender, impairment, industry, and earnings groups. However, we also find that younger rejected applicants have substantial employment after application. To what extent this translates into potential employment for new beneficiaries depends on which group among them is considered "on the margin" of receiving DI. If we use initially rejected applicants -- a large and growing fraction of new beneficiaries -- the resulting counterfactual employment rate for younger applicants is low, too. We also find that rejected applicants bear signs of economically induced applicants. DI appears to induce a growing number of less successful workers to apply, an important fraction of which ends up without benefits and non-employed.

Subjects

Files

More About This Work

Academic Units
Economics
Publisher
Department of Economics, Columbia University
Series
Department of Economics Discussion Papers, 0809-05
Published Here
March 28, 2011