The Longitudinal Structure of Earnings Losses among Work-Limited Disabled Workers
This paper asks: What are the dynamic effects of disability on earnings? Unlike most of the previous literature, it uses panel data, and fixed effects methods are used to assess how the earnings of disabled workers depart from expected levels over many years before and after the date of onset of their disability. The paper also examines how worker characteristics affect earnings losses from disability, with particular attention paid to the age at which the person suffers onset. Disabled men are found to experience sharp drops in earnings that predate the measured date of onset. Earnings recover rapidly soon after onset, with much of the immediate reduction made up in the first two post-onset years. A modest downward trend follows, resulting in significant long-term losses in expected annual earnings of about 12 percent per year. Being older at onset, nonwhite, more chronically disabled, and less educated cause the losses from disability to be larger and the recovery smaller. A large portion of these differences across groups appear to derive from industry affiliation after onset. The Paper argues the facts are all consistent with a simple human capital explanation of the disability process.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chowdhury, Gopa & Nickell, Stephen, 1985. "Hourly Earnings in the United States: Another Look at Unionization, Schooling, Sickness, and Unemployment Using PSID Data," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages 38-69, January.
- Hugo Benitez-Silva & Moshe Buchinsky & Hiu-Man Chan & John Rust & Sofia Sheivasser, 1997.
"An Empirical Analysis of the Social Security Disability Application, Appeal, and Award Process,"
9712001, EconWPA, revised 16 Feb 1998.
- Benitez-Silva, Hugo & Buchinsky, Moshe & Chan, Hiu Man & Rust, John & Sheidvasser, Sofia, 1999. "An empirical analysis of the social security disability application, appeal, and award process," Labour Economics, Elsevier, vol. 6(2), pages 147-178, June.
- John P. Rust, 1989.
"A Dynamic Programming Model of Retirement Behavior,"
in: The Economics of Aging, pages 359-404
National Bureau of Economic Research, Inc.
- John Rust, 1987. "A Dynamic Programming Model of Retirement Behavior," NBER Working Papers 2470, National Bureau of Economic Research, Inc.
- John M. Abowd & David Card, 1986.
"On the Covariance Structure of Earnings and Hours Changes,"
NBER Working Papers
1832, National Bureau of Economic Research, Inc.
- Abowd, John M & Card, David, 1989. "On the Covariance Structure of Earnings and Hours Changes," Econometrica, Econometric Society, vol. 57(2), pages 411-45, March.
- Steven Stern, 1989. "Measuring the Effect of Disability on Labor Force Participation," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 361-395.
- William G. Johnson & James Lambrinos, 1985. "Wage Discrimination against Handicapped Men and Women," Journal of Human Resources, University of Wisconsin Press, vol. 20(2), pages 264-277.
- 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.
- John Bound, 1989. "The Health and Earnings of Rejected Disability Insurance Applicants," NBER Working Papers 2816, National Bureau of Economic Research, Inc.
- Bils, Mark J, 1985. "Real Wages over the Business Cycle: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 666-89, August.
- Robin C. Sickles & Paul J. Taubman, 1984.
"An Analysis of the Health and Retirement Status of the Elderly,"
NBER Working Papers
1459, National Bureau of Economic Research, Inc.
- Sickles, Robin C & Taubman, Paul, 1986. "An Analysis of the Health and Retirement Status of the Elderly," Econometrica, Econometric Society, vol. 54(6), pages 1339-56, November.
- Alan Krueger & Douglas Kruse, 1995.
"Labor Market Effects of Spinal Cord Injuries in the Dawn of the Computer Age,"
NBER Working Papers
5302, National Bureau of Economic Research, Inc.
- Alan Krueger & Douglas Kruse, 1995. "Labor Market Effects of Spinal Cord Injuries in the Dawn of the Computer Age," Working Papers 728, Princeton University, Department of Economics, Industrial Relations Section..
- John Bound & Timothy Waidmann, 1992. "Disability Transfers, Self-Reported Health, and the Labor Force Attachment of Older Men: Evidence from the Historical Record," The Quarterly Journal of Economics, Oxford University Press, vol. 107(4), pages 1393-1419.
- Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
When requesting a correction, please mention this item's handle: RePEc:uwp:jhriss:v:38:y:2003:i:3:p618-646. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.