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How Do Unemployment Insurance Benefits Affect the Decision to Apply for Social Security Disability Insurance?

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  • Stephan Lindner

Abstract

This paper examines whether Unemployment Insurance (UI) benefits affect the decision to apply for Social Security Disability Insurance (DI). Using data from the Survey of Income and Benefits matched to administrative records on DI applications, I find that higher UI benefits reduce applications for DI. This substitution effect is imprecisely estimated but economically significant, implying that a $1.00 increase in UI benefits reduces DI expenditures by 15 cents. Recognizing this cost-saving effect would increase the optimal UI benefit level by more than 20 percent for coefficients of relative risk aversion ranging from two to five.

Suggested Citation

  • Stephan Lindner, 2016. "How Do Unemployment Insurance Benefits Affect the Decision to Apply for Social Security Disability Insurance?," Journal of Human Resources, University of Wisconsin Press, vol. 51(1), pages 62-94.
    • Handle: RePEc:uwp:jhriss:v:51:y:2016:i:1:p:62-94
    Note: DOI: 10.3368/jhr.51.1.62
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    Cited by:

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    2. Furtado, Delia & Papps, Kerry L. & Theodoropoulos, Nikolaos, 2022. "Who Goes on Disability when Times are Tough? The Role of Work Norms among Immigrants," European Economic Review, Elsevier, vol. 143(C).
    3. Anne M. Garvey & Manuel Ventura-Marco & Carlos Vidal-Meliá, 2021. "Does the pension system’s income statement really matter? A proposal for an NDC scheme with disability and minimum pension benefits," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 34(1), pages 292-310, January.
    4. De Brouwer, Octave & Tojerow, Ilan, 2023. "The Growth of Disability Insurance in Belgium: Determinants and Policy Implications," IZA Discussion Papers 16376, Institute of Labor Economics (IZA).
    5. Goda, Gopi Shah & Jackson, Emilie & Nicholas, Lauren Hersch & Stith, Sarah See, 2023. "Older workers’ employment and Social Security spillovers through the second year of the COVID-19 pandemic," Journal of Pension Economics and Finance, Cambridge University Press, vol. 22(4), pages 524-549, October.
    6. Zweimüller, Josef, 2018. "Unemployment insurance and the labor market," Labour Economics, Elsevier, vol. 53(C), pages 1-14.
    7. Avram, Silvia & Brewer, Mike & Salvatori, Andrea, 2018. "Can't work or won't work: Quasi-experimental evidence on work search requirements for single parents," Labour Economics, Elsevier, vol. 51(C), pages 63-85.
    8. Colleen Carey & Nolan H. Miller & David Molitor, 2022. "Why Does Disability Increase During Recessions? Evidence from Medicare," NBER Working Papers 29988, National Bureau of Economic Research, Inc.
    9. Wei Fu & Chen Huang & Feng Liu, 2023. "Unemployment benefits, food insecurity, and supplemental nutrition assistance program spending," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(2), pages 479-502, March.

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