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The Social Security Disability Program and Labor Force Participation

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Jonathan S. Leonard

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Abstract

In the last twenty years the labor force participation rates of 45 to 54-year-old men have fallen 10.6 percentage points among non-whites and 4.4 percentage points among whites. I find that nearly half of this puzzling decline can be explained by the growth of the Social Security Disability program. By 1975, 6.22% of the prime-age non-white men and 3.57% of the white men were Social Security Disability beneficiaries. Despite the medical screening of applicants, I find in cross-section estimates an elasticity of .35 for beneficiary status with respect to benefit levels. As eligibility requirements have eased and as benefit levels have increased relative to earnings more men have dropped out of the labor force and become Social Security Disability beneficiaries.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0392.

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Date of creation: Aug 1979
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Handle: RePEc:nbr:nberwo:0392

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  1. Saad Z. Nagi & Linda W. Hadley, 1972. "Disability behavior: Income change and motivation to work," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 25(2), pages 223-233, January.
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  1. Daniel S. Hamermesh, 1981. "Transfers, Taxes, and the NAIRU," NBER Working Papers 0548, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Sergi Jiménez-Martín & José M. Labeaga & Cristina Vilaplana, 2006. "Award Errors and Permanent Disability Benefits in Spain," Working Papers 2006-18, FEDEA. [Downloadable!]
    Other versions:
  3. Robert S. Gay & William L. Wascher, 1989. "Persistence Effects in Labor Force Participation," Eastern Economic Journal, Eastern Economic Association, vol. 15(3), pages 177-187, Jul-Sep. [Downloadable!]
    Other versions:
  4. Jonathan Gruber & Jeffrey D. Kubik, 1994. "Disability Insurance Rejection Rates and the Labor Supply of Older Workers," NBER Working Papers 4941, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Lixin Cai & Ha Vu & Roger Wilkins, 2006. "Disability Support Pension Recipients: Who Gets Off (and Stays Off) Payments?," Melbourne Institute Working Paper Series wp2006n18, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
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  6. Burkhauser, Richard V. & Butler, J. S. & Gulcin Gumus, 2003. "Dynamic Modeling of the SSDI Application Timing Decision: The Importance of Policy Variables," IZA Discussion Papers 942, Institute for the Study of Labor (IZA). [Downloadable!]
  7. Alan L. Gustman & Thomas L. Steinmeier, 1985. "A Disaggregated, Structural Analysis of Retirement by Race, Difficulty of Work and Health," NBER Working Papers 1585, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Philip de Jong & Robert Haveman & Barbara Wolfe, 1988. "Labor and Transfer Income and Older Women's Work: Estimates From the United States," NBER Working Papers 2728, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. John Bound, 1989. "The Health and Earnings of Rejected Disability Insurance Applicants," NBER Working Papers 2816, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Richard V. Burkhauser & J.S. Butler & Yang-Woo Kim, 1996. "The timing of disability insurance application: a choice-based semiparametric hazard model," Working Papers 1996-005, Federal Reserve Bank of St. Louis. [Downloadable!]
  11. Merkuryeva Irina, 2007. "The system of disability benefits in Russia. Estimation of targeting accuracy," EERC Working Paper Series 07-04e, EERC Research Network, Russia and CIS. [Downloadable!]
  12. Richard B. Freeman, 1981. "The Evolution of the American Labor Market 1948-1980," NBER Working Papers 0446, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. H. Hoynes & R. Moffitt, . "The effectiveness of financial work incentives in DI and SSI: Lessons from other transfer programs," Institute for Research on Poverty Discussion Papers 1073-95, University of Wisconsin Institute for Research on Poverty. [Downloadable!]
  14. Alan B. Krueger & Bruce D. Meyer, 2002. "Labor Supply Effects of Social Insurance," NBER Working Papers 9014, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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