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Reconciling Findings on the Employment Effect of Disability Insurance

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Author Info

  • John Bound

    (University of Michigan and National Bureau of Economic Research)

  • Stephan Lindner

    (University of Michigan)

  • Timothy Waidmann

    (Urban Institute)

Abstract

Over the last 25 years the Social Security Disability Insurance Program (DI) has grown dramatically. During the same period of time employment rates for men with work limitations showed substantial declines in both absolute and relative terms. While the timing of these trends suggests that the expansion of DI was a major contributor to employment decline and raises questions about the targeting of disability benefits, studies using denied applicants suggest a more modest role for DI expansion. In order to reconcile these findings, we decompose total employment changes into population and employment changes for three categories: DI beneficiaries, denied applicants and non-applicants. Our results show that during the early 1990s, the growth in DI can fully explain the employment decline for men only under an extreme assumption about the employment potential of beneficiaries. For the period after the mid-1990s, we find little role for the DI program in explaining the continuing employment decline for men with work limitations.

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Bibliographic Info

Paper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number wp239.

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Length: 38 pages
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:mrr:papers:wp239

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Cited by:
  1. Sudipto Banerjee & David Blau, 2013. "Employment Trends by Age in the United States: Why Are Older Workers Different?," Working Papers wp285, University of Michigan, Michigan Retirement Research Center.
  2. Robert A. Moffitt, 2012. "The U.S. Employment-Population Reversal in the 2000s: Facts and Explanations," Economics Working Paper Archive 604, The Johns Hopkins University,Department of Economics.

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