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Consequences of eliminating federal disability benefits for substance abusers


  • Chatterji, Pinka
  • Meara, Ellen


Using annual, repeated cross-sections from national household surveys, we estimate how the January 1997 termination of federal disability insurance, Supplemental Security Income (SSI), 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 likely substance users and others, and we used a difference-in-difference-in-difference approach to mitigate potential omitted variables bias. In the short-run (1997-1998), 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 later period after the policy change (1999-2002), the rate of SSI receipt rose, and short-run gains in labor market outcomes diminished.

Suggested Citation

  • Chatterji, Pinka & Meara, Ellen, 2010. "Consequences of eliminating federal disability benefits for substance abusers," Journal of Health Economics, Elsevier, vol. 29(2), pages 226-240, March.
  • Handle: RePEc:eee:jhecon:v:29:y:2010:i:2:p:226-240

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    References listed on IDEAS

    1. repec:aph:ajpbhl:10.2105/ajph.2004.061762_2 is not listed on IDEAS
    2. Keisuke Hirano & Guido W. Imbens & Geert Ridder, 2003. "Efficient Estimation of Average Treatment Effects Using the Estimated Propensity Score," Econometrica, Econometric Society, vol. 71(4), pages 1161-1189, July.
    3. Dobkin, Carlos & Puller, Steven L., 2007. "The effects of government transfers on monthly cycles in drug abuse, hospitalization and mortality," Journal of Public Economics, Elsevier, vol. 91(11-12), pages 2137-2157, December.
    4. repec:aph:ajpbhl:2004:94:1:46-47_7 is not listed on IDEAS
    5. Lucie Schmidt & Purvi Sevak, 2000. "AFDC, SSI, and Welfare Reform Aggressiveness: Caseload Reductions vs. Caseload Shifting," Department of Economics Working Papers 2002-03, Department of Economics, Williams College.
    6. Ellen Meara & Richard Frank, 2006. "Welfare Reform, Work Requirements, and Employment Barriers," NBER Working Papers 12480, National Bureau of Economic Research, Inc.
    7. Susan L. Ettner & Richard G. Frank & Ronald C. Kessler, 1997. "The Impact of Psychiatric Disorders on Labor Market Outcomes," NBER Working Papers 5989, National Bureau of Economic Research, Inc.
    8. 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).
    9. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    10. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
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    Cited by:

    1. Dickey, H. & Ikenwilo, D. & Norwood, P. & Watson, V. & Zangelidis, A., 2016. "“Doctor my eyes”: A natural experiment on the demand for eye care services," Social Science & Medicine, Elsevier, vol. 150(C), pages 117-127.
    2. Ikenwilo, Divine, 2013. "A difference-in-differences analysis of the effect of free dental check-ups in Scotland," Social Science & Medicine, Elsevier, vol. 83(C), pages 10-18.
    3. Moore, Timothy J., 2015. "The employment effects of terminating disability benefits," Journal of Public Economics, Elsevier, vol. 124(C), pages 30-43.
    4. Orsini, Chiara, 2016. "Ownership and exit behavior: evidence from the home health care market," LSE Research Online Documents on Economics 65292, London School of Economics and Political Science, LSE Library.
    5. Beau Kilmer & Rosalie Liccardo Pacula, 2010. "Preventing Drug Use," NBER Chapters,in: Targeting Investments in Children: Fighting Poverty When Resources are Limited, pages 181-220 National Bureau of Economic Research, Inc.

    More about this item


    Disability Substance abuse Employment Health care utilization;

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy


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