Till von Wachter () (Columbia University - Department of Economics) Jae Song () (Social Security Administration) Joyce Manchester (Social Security Administration)
Abstract
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.
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Paper provided by Columbia University, Department of Economics in its series Discussion Papers with number
0809-05.
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