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Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt

  • Nicole Maestas
  • Kathleen J. Mullen
  • Alexander Strand

We present the first causal estimates of the effect of Social Security Disability Insurance benefit receipt on labor supply using all program applicants. We use administrative data to match applications to disability examiners and exploit variation in examiners' allowance rates as an instrument for benefit receipt. We find that among the estimated 23 percent of applicants on the margin of program entry, employment would have been 28 percentage points higher had they not received benefits. The effect is heterogeneous, ranging from no effect for those with more severe impairments to 50 percentage points for entrants with relatively less severe impairments.

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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 103 (2013)
Issue (Month): 5 (August)
Pages: 1797-1829

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Handle: RePEc:aea:aecrev:v:103:y:2013:i:5:p:1797-1829
Note: DOI: 10.1257/aer.103.5.1797
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  1. Jonathan Gruber, 1996. "Disability Insurance Benefits and Labor Supply," NBER Working Papers 5866, National Bureau of Economic Research, Inc.
  2. David H. Autor & Nicole Maestas & Kathleen J. Mullen & Alexander Strand, 2015. "Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings of Disability Applicants," NBER Working Papers 20840, National Bureau of Economic Research, Inc.
  3. Thomas J. Kane & Douglas O. Staiger, 2008. "Estimating Teacher Impacts on Student Achievement: An Experimental Evaluation," NBER Working Papers 14607, National Bureau of Economic Research, Inc.
  4. Parsons, Donald O, 1991. "The Health and Earnings of Rejected Disability Insurance Applicants: Comment," American Economic Review, American Economic Association, vol. 81(5), pages 1419-1426, December.
  5. Chen, Susan & van der Klaauw, Wilbert, 2008. "The work disincentive effects of the disability insurance program in the 1990s," Journal of Econometrics, Elsevier, vol. 142(2), pages 757-784, February.
  6. Bound, John, 1989. "The Health and Earnings of Rejected Disability Insurance Applicants," American Economic Review, American Economic Association, vol. 79(3), pages 482-503, June.
  7. Eric French & Jae Song, 2009. "The effect of disability insurance receipt on labor supply," Working Paper Series WP-09-05, Federal Reserve Bank of Chicago.
  8. Gina Livermore & David Stapleton & Henry Claypool, 2009. "Health Insurance and Health Care Access Before and After SSDI Entry," Mathematica Policy Research Reports e650433d9c134b5e977c28c86, Mathematica Policy Research.
  9. David H. Autor & Mark G. Duggan, 2003. "The Rise in the Disability Rolls and the Decline in Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 157-206.
  10. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
  11. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
  12. James J. Heckman & Sergio Urzua & Edward Vytlacil, 2009. "Understanding Instrumental Variables in Models with Essential Heterogeneity," Working Papers 200941, Geary Institute, University College Dublin.
  13. Stock, James H & Wright, Jonathan H & Yogo, Motohiro, 2002. "A Survey of Weak Instruments and Weak Identification in Generalized Method of Moments," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(4), pages 518-529, October.
  14. Gruber, Jonathan & Kubik, Jeffrey D., 1997. "Disability insurance rejection rates and the labor supply of older workers," Journal of Public Economics, Elsevier, vol. 64(1), pages 1-23, April.
  15. Perry, Cynthia D., 2008. "Does treating maternal depression improve child health management The case of pediatric asthma," Journal of Health Economics, Elsevier, vol. 27(1), pages 157-173, January.
  16. Till von Wachter & Jae Song & Joyce Manchester, 2011. "Trends in Employment and Earnings of Allowed and Rejected Applicants to the Social Security Disability Insurance Program," American Economic Review, American Economic Association, vol. 101(7), pages 3308-3329, December.
  17. repec:mpr:mprres:6274 is not listed on IDEAS
  18. Haveman, Robert H & Wolfe, Barbara L, 1984. "The Decline in Male Labor Force Participation: Comment," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 532-541, June.
  19. Joseph J. Doyle Jr., 2007. "Child Protection and Child Outcomes: Measuring the Effects of Foster Care," American Economic Review, American Economic Association, vol. 97(5), pages 1583-1610, December.
  20. Joseph J. Doyle Jr., 2008. "Child Protection and Adult Crime: Using Investigator Assignment to Estimate Causal Effects of Foster Care," Journal of Political Economy, University of Chicago Press, vol. 116(4), pages 746-770, 08.
  21. repec:mpr:mprres:6276 is not listed on IDEAS
  22. Andrew J. Houtenville & David C. Stapleton & Robert R. Weathers II & Richard V. Burkhauser (ed.), 2009. "Counting Working-Age People with Disabilities: What Current Data Tell Us and Options for Improvement," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number cwap, November.
  23. Abadie, Alberto, 2003. "Semiparametric instrumental variable estimation of treatment response models," Journal of Econometrics, Elsevier, vol. 113(2), pages 231-263, April.
  24. Haveman, Robert H. & Wolfe, Barbara L., 1984. "Disability transfers and early retirement: a casual relationship?," Journal of Public Economics, Elsevier, vol. 24(1), pages 47-66, June.
  25. Parsons, Donald O, 1980. "The Decline in Male Labor Force Participation," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 117-134, February.
  26. Kalamazoo & MI: W.E. Upjohn Institute & Andrew J. Houtenville & David C. Stapleton & Robert R. Weathers II & Richard V. Burkhauser & editors, 2009. "Counting Working-Age People with Disabilities: What Current Data Tell Us and Options for Improvement," Mathematica Policy Research Reports 1aa1fcf4f91a4de5b988924cf, Mathematica Policy Research.
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