Workers' Applications to Social Insurance Programs When Earnings and Eligibility Are Uncertain
AbstractA worker's decision whether to apply for public transfers may depend not only on his expected level of forgone labor earnings but also on his degree of uncertainty about such earnings. This article provides theory and evidence about the effects of earnings and eligibility uncertainty on participation decisions. The application rate to the Social Security Disability Insurance program is estimated to be about 15 percent higher than it would be in the absence of earnings risk. As an application to tax policy, optimal marginal wage tax rates may be higher than indicated in previous analyses involving wage uncertainty. Copyright 1998 by University of Chicago Press.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Labor Economics.
Volume (Year): 16 (1998)
Issue (Month): 4 (October)
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Web page: http://www.journals.uchicago.edu/JOLE/
Other versions of this item:
- Kreider, Brent, 1998. "Workers' Applications to Social Insurance Programs when Earnings and Eligibility Are Uncertain," Staff General Research Papers 5189, Iowa State University, Department of Economics.
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- Richard V. Burkhauser & J. S. Butler & Gulcin Gumus, 2004. "Dynamic programming model estimates of Social Security Disability Insurance application timing," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(6), pages 671-685.
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- Hamish Low & Luigi Pistaferri, 2014. "Disability Insurance and the Dynamics of the Incentive-Insurance Tradeoff," Cambridge Working Papers in Economics 1420, Faculty of Economics, University of Cambridge.
- Burkhauser, Richard V. & Butler, J. S. & Gumus, Gulcin, 2003. "Option Value and Dynamic Programming Model Estimates of Social Security Disability Insurance Application Timing," IZA Discussion Papers 941, Institute for the Study of Labor (IZA).
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