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Dynamic Modeling of the SSDI Application Timing Decision: The Importance of Policy Variables

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Author Info
Burkhauser, Richard V. (Cornell University)
Butler, J. S. (University of Kentucky)
Gulcin Gumus () (IZA Bonn)

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Abstract

This paper analyzes the importance of policy variables in the context of Social Security Disability Insurance (SSDI) application timing decision. Previously, we explicitly modeled the optimal timing of SSDI application using dynamic structural models. We estimated these models using data from the Health and Retirement Study (HRS). This paper uses option value model estimates to simulate application timing under alternative SSDI policy formulations. We consider changes in three policy variables: benefit levels, acceptance rates, and employer accommodation. Our simulations suggest all these changes would have substantial effects on expected spell lengths until application and on lifetime application rates, and hence on SSDI caseloads.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 942.

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Length: 52 pages
Date of creation: Nov 2003
Date of revision:
Handle: RePEc:iza:izadps:dp942

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Related research
Keywords: Social Security Disability Insurance; Health and Retirement Survey; option value;

Other versions of this item:

Find related papers by JEL classification:
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  6. Burkhauser, Richard V. & Butler, J. S. & Gulcin Gumus, 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). [Downloadable!]
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    Other versions:
  14. Stock, James H & Wise, David A, 1990. "Pensions, the Option Value of Work, and Retirement," Econometrica, Econometric Society, vol. 58(5), pages 1151-80, September. [Downloadable!] (restricted)
    Other versions:
  15. Kreider, Brent, 2002. "Social Security Disability Insurance: Applications, Awards, and Lifetime Income Flows," Staff General Research Papers 5188, Iowa State University, Department of Economics.
    Other versions:
  16. Bound, John & Waidmann, Timothy, 1992. "Disability Transfers, Self-Reported Health, and the Labor Force Attachment of Older Men: Evidence from the Historical Record," The Quarterly Journal of Economics, MIT Press, vol. 107(4), pages 1393-419, November. [Downloadable!] (restricted)
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    Other versions:
  23. Janice Halpern & Jerry A. Hausman, 1985. "Choice Under Uncertainty: A Model of Applications for the Social Security Disability Insurance Program," NBER Working Papers 1690, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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