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Consequences of Eliminating Federal Disability Benefits for Substance Abusers

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Author Info
Pinka Chatterji
Ellen Meara

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Abstract

Using annual, repeated cross-sections from national household survey data, we estimate how the January 1997 termination of federal disability insurance, Supplemental Security Income (SSI) and Disability Insurance (DI), for those with Drug Addiction and Alcoholism affected labor market outcomes among individuals targeted by the legislation. We also examine whether the policy change affected health insurance, health care utilization, and arrests. We employ propensity score methods to address differences in observed characteristics between substance users and others, and we used a difference-in-difference-in-difference approach to mitigate potential omitted variables bias. In the short-run (1997-1999), declines in SSI receipt accompanied appreciable increases in labor force participation and current employment. There was little measurable effect of the policy change on insurance and utilization, but we have limited power to detect effects on these outcomes. In the long-run (1999-2002), the rate of SSI receipt returned to earlier levels, and short-run gains in labor market outcomes waned.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13407.

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Date of creation: Sep 2007
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Handle: RePEc:nbr:nberwo:13407

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Find related papers by JEL classification:
I1 - Health, Education, and Welfare - - Health
I28 - Health, Education, and Welfare - - Education - - - Government Policy

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  1. Lucie Schmidt & Purvi Sevak, 2004. "AFDC, SSI, and Welfare Reform Aggressiveness: Caseload Reductions versus Caseload Shifting," Journal of Human Resources, University of Wisconsin Press, vol. 39(3). [Downloadable!] (restricted)
  2. Ellen Meara & Richard Frank, 2006. "Welfare Reform, Work Requirements, and Employment Barriers," NBER Working Papers 12480, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May. [Downloadable!] (restricted)
  4. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July. [Downloadable!] (restricted)
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