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Labor Supply under Disability Insurance

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  • Frederic P. Slade

Abstract

There has been a significant recent growth in the Social Security Administration's Disability Insurance (DI) program, both in the number of covered workers under the program and in the amount of monthly benefits, One possible factor causing this growth has been labor supply disincentives under the pro- gram. The labor supply decision by an individual involves the effect of the disability benefit structure (potential benefits) on labor force participation. Probit estimates from the 1969 original sample of the Longitudinal Retirement History Study (LRHS) indicated an elasticity of participation with respect to benefits of -0031 for married men aged 58-63, and -.023 for all men of the same age group. The magnitude of these estimates are much less than those found by authors such as Parsons, and suggest relatively insignificant efficiency losses in terns of reduced work effort.

Suggested Citation

  • Frederic P. Slade, 1982. "Labor Supply under Disability Insurance," NBER Working Papers 0860, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0860
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    References listed on IDEAS

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    1. Reuben Gronau, 1974. "The Effect of Children on the Housewife's Value of Time," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 457-490, National Bureau of Economic Research, Inc.
    2. Van de Water, Paul N, 1979. "Disability Insurance," American Economic Review, American Economic Association, vol. 69(2), pages 275-278, May.
    3. Monroe Berkowitz & William G. Johnson, 1974. "Health and Labor Force Participation," Journal of Human Resources, University of Wisconsin Press, vol. 9(1), pages 117-128.
    4. Jerry A. Hausman, 1980. "The Effect of Wages, Taxes, and Fixed Costs on Women's Labor Force Participation," NBER Chapters, in: Econometric Studies in Public Finance, pages 161-194, National Bureau of Economic Research, Inc.
    5. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-694, July.
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    Cited by:

    1. Hübler, Olaf, 1983. "Ökonometrische Untersuchungen zum Arbeitsangebot von Frauen," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 16(3), pages 301-310.
    2. Hübler, Olaf, 1983. "Ökonometrische Untersuchungen zum Arbeitsangebot von Frauen," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 16(3), pages 301-310.

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