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

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  • Burkhauser, Richard V.

    ()
    (Cornell University)

  • Butler, J. S.

    ()
    (University of Kentucky)

  • Gumus, Gulcin

    ()
    (Florida Atlantic University)

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

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  22. Richard V. Burkhauser & J. S. Butler & Yang-Woo Kim & Robert R. Weathers II, 1999. "The Importance of Accommodation on the Timing of Disability Insurance Applications: Results from the Survey of Disability and Work and the Health and Retirement Study," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 589-611.
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  31. 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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