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Does the Rise in the Full Retirement Age Encourage Disability Benefits Applications? Evidence from the Health and Retirement Study

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  • Xiaoyan Li

    (RAND)

  • Nicole Maestas

    (RAND)

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    Abstract

    As the Social Security full retirement age rises, the relative generosity of Social Security retirement benefits compared to disability benefits is declining, raising the incentive for insured people to apply for disability benefits. After controlling for other differences in observable characteristics, such as life-time earnings, we find that an average four month increase in the FRA slightly increases the two-year DI application rate by 0.04-0.30 percentage points. The effect is greater among those with a work limiting health problem (0.22-0.89 percentage points).

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    File URL: http://www.mrrc.isr.umich.edu/publications/Papers/pdf/wp198.pdf
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    Bibliographic Info

    Paper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number wp198.

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    Length: 37 pages
    Date of creation: Sep 2008
    Date of revision:
    Handle: RePEc:mrr:papers:wp198

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