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The Unsustainable Rise of the Disability Rolls in the United States: Causes, Consequences, and Policy Options

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  • David H. Autor

Abstract

Two ailments limit the effectiveness and threaten the long-term viability of the U.S. Social Security Disability Insurance program (SSDI). First, the program is ineffective in assisting the vast majority of workers with less severe disabilities to reach their employment potential or earn their own way. Second, the program’s expenditures on cash transfers and medical benefits— exceeding $1,500 per U.S. household—are extremely high and growing unsustainably. There is no compelling evidence, however, that the incidence of disabling conditions among the U.S. working age population is rising. This paper discusses the challenges facing the SSDI program, explains how its design has led to rapid and unsustainable growth, considers why past efforts to slow program growth have met with minimal and fleeting success, and outlines three recent proposals that would modify the program to slow growth while potentially improving the employment prospects of workers with disabilities. Because these proposals depart substantially from a program design that has seen little change in half a century, their efficacy is unproven. Additionally, even well-meaning efforts to place the SSDI program on a sustainable trajectory run the risk of creating additional hurdles for claimants who are truly unable to work. Nevertheless, the imminent exhaustion of the SSDI Trust Fund provides an impetus and an opportunity to explore innovative solutions to the longstanding policy challenges posed by the SSDI program.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17697.

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Date of creation: Dec 2011
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Handle: RePEc:nbr:nberwo:17697

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  1. Richard V. Burkhauser & Mary C. Daly & Philip R. de Jong, 2008. "Curing the Dutch Disease: Lessons for United States Disability Policy," Working Papers wp188, University of Michigan, Michigan Retirement Research Center.
  2. Mark Duggan & Scott A. Imberman, 2009. "Why Are the Disability Rolls Skyrocketing? The Contribution of Population Characteristics, Economic Conditions, and Program Generosity," NBER Chapters, in: Health at Older Ages: The Causes and Consequences of Declining Disability among the Elderly, pages 337-379 National Bureau of Economic Research, Inc.
  3. David Stapleton & David Wittenburg, 2011. "The SSDI Trust Fund: New Solutions to an Old Problem," Mathematica Policy Research Reports 7018, Mathematica Policy Research.
  4. David Autor & Nicole Maestas & Kathleen Mullen & Alexander Strand, 2011. "Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings of Disability Applicants," Working Papers wp258, University of Michigan, Michigan Retirement Research Center.
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Cited by:
  1. Casey B. Mulligan, 2012. "Recent Marginal Labor Income Tax Rate Changes by Skill and Marital Status," NBER Chapters, in: Tax Policy and the Economy, Volume 27, pages 69-100 National Bureau of Economic Research, Inc.
  2. Delia Furtado & Nikolaos Theodoropoulos, 2014. "Immigrant Networks and the Take-Up of Disability Programs: Evidence from US Census Data," Working papers 2014-03, University of Connecticut, Department of Economics.
  3. Juha Tuomala & Tomi Kyyrä, 2013. "Does experience rating reduce disability inflow?," Working Papers 46, Government Institute for Economic Research Finland (VATT).
  4. Andreas Ravndal Kostol & Magne Mogstad, 2014. "How Financial Incentives Induce Disability Insurance Recipients to Return to Work," American Economic Review, American Economic Association, vol. 104(2), pages 624-55, February.

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