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Labor Supply Incentives and Disincentives for the Disabled

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  • Jonathan S. Leonard

Abstract

The past three decades have witnessed a large and puzzling decline in labor force participation by prime-age males, and a correspondingly large increase in Social Security disability beneficiary roles.This paper reviews the analytical studies that have attempted to determine the causal links between disability, beneficiary status, and labor-force non-participation. Although disability is often thought of as a purely medically determined condition with no labor supply responsiveness to economic factors, models of Social Security disability beneficiary status as an economic decision have had some success in explaining both the growth of the program and the decline in labor force participation. These studies have, however, produced a wide range of estimates of labor supply elasticity, in part because of the difficulty of the underlying econometric problem of estimating the response to two (or more) potential income streams, only one of which is usually observed for any individual.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1744.

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Date of creation: Oct 1985
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Publication status: published as Leonard, Jonathan S. "Labor Supply Incentives and Disincentives for the Disabled," Disability and the Labor Market: Economic Problems, Policies, and Programs, eds. M. Berkowitz & M.A. Hill, Ithaca, NY: ILR Press, 1986, pp. 64-94.
Handle: RePEc:nbr:nberwo:1744

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Cited by:
  1. 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.
  2. Hoynes, Hilary Williamson & Moffitt, Robert, 1999. "Tax Rates and Work Incentives in the Social Security Disability Insurance Program: Current Law and Alternative Reforms," National Tax Journal, National Tax Association, vol. 52(n. 4), pages 623-54, December.
  3. Derek Hum & Wayne Simpson, 1996. "Canadians with Disabilities and the Labour Market," Canadian Public Policy, University of Toronto Press, vol. 22(3), pages 287-299, September.
  4. Owen O'Donnell, 1998. "The Effect of Disability on Employment Allowing for Work Incapacity," Studies in Economics 9813, Department of Economics, University of Kent.
  5. Jonathan Gruber, 2000. "Disability Insurance Benefits and Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1162-1183, December.
  6. R. Haveman & K. Holden & B. Wolfe & P. Smith & K. Wilson, . "The Changing Economic Status of U.S. Disabled Men: Trends and Their Determinants, 1982–1991," Institute for Research on Poverty Discussion Papers 1190-99, University of Wisconsin Institute for Research on Poverty.
  7. Peter Diamond & Jonathan Gruber, 1997. "Social Security and Retirement in the U.S," NBER Working Papers 6097, National Bureau of Economic Research, Inc.
  8. Levine, David I., 1997. "Reinventing Disability Policy," Institute for Research on Labor and Employment, Working Paper Series qt7cq715wp, Institute of Industrial Relations, UC Berkeley.
  9. Robert Haveman & Barbara Wolfe & Fung Mey Huang, 1989. "Disability Status as an Unobservable: Estimates From a Structural Model," NBER Working Papers 2831, National Bureau of Economic Research, Inc.
  10. 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.
  11. Burkhauser, Richard V. & Butler, J. S. & Gumus, Gulcin, 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).

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