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Unemployment Insurance and Disability Insurance in the Great Recession

In: Labor Markets in the Aftermath of the Great Recession

Author

Listed:
  • Andreas I. Mueller
  • Jesse Rothstein
  • Till M. von Wachter

Abstract

Social Security Disability Insurance (SSDI) awards rise during recessions. If marginal applicants are able to work but unable to find jobs, countercyclical Unemployment Insurance (UI) benefit extensions may reduce SSDI uptake. Exploiting UI extensions in the Great Recession as a source of variation, we find no indication that expiration of UI benefits causes SSDI applications and can rule out effects of meaningful magnitude. A supplementary analysis finds little overlap between the two programs' recipient populations: only 28% of SSDI awardees had any labor force attachment in the prior calendar year, and of those, only 4% received UI.
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Suggested Citation

  • Andreas I. Mueller & Jesse Rothstein & Till M. von Wachter, 2013. "Unemployment Insurance and Disability Insurance in the Great Recession," NBER Chapters,in: Labor Markets in the Aftermath of the Great Recession, pages 445-475 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:13277
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    References listed on IDEAS

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    1. Landais, Camille & Michaillat, Pascal & Saez, Emmanuel, 2010. "Optimal Unemployment Insurance over the Business Cycle," CEPR Discussion Papers 8132, C.E.P.R. Discussion Papers.
    2. Jesse Rothstein & Robert G. Valletta, 2017. "Scraping by: Income and Program Participation After the Loss of Extended Unemployment Benefits," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 36(4), pages 880-908, September.
    3. Matthew S. Rutledge, 2011. "The Impact of Unemployment Insurance Extensions on Disability Insurance Application and Allowance Rates," Working Papers, Center for Retirement Research at Boston College wp2011-17, Center for Retirement Research, revised Oct 2011.
    4. Jesse Rothstein, 2011. "Unemployment Insurance and Job Search in the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(2 (Fall)), pages 143-213.
    5. Dan Black & Kermit Daniel & Seth Sanders, 2002. "The Impact of Economic Conditions on Participation in Disability Programs: Evidence from the Coal Boom and Bust," American Economic Review, American Economic Association, vol. 92(1), pages 27-50, March.
    6. 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.
    7. Johannes F. Schmieder† & Till von Wachter & Stefan Bender, 2011. "The Effects Of Extended Unemployment Insurance Over The Business Cycle: Evidence From Regression Discontinuity Estimates Over Twenty Years," Boston University - Department of Economics - Working Papers Series WP2011-063, Boston University - Department of Economics.
    8. Steven J. Davis & Till Von Wachter, 2011. "Recessions and the Costs of Job Loss," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(2 (Fall)), pages 1-72.
    9. 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.
    10. Nicole Maestas & Kathleen J. Mullen & Alexander Strand, 2013. "Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt," American Economic Review, American Economic Association, vol. 103(5), pages 1797-1829, August.
    11. Stephan Lindner & Austin Nichols, 2012. "The Impact of Temporary Assistance Programs on Disability Rolls and Re-Employment," Working Papers, Center for Retirement Research at Boston College wp2012-2, Center for Retirement Research, revised Jan 2012.
    12. Norma B. Coe & Kelly Haverstick & Alicia H. Munnell & Anthony Webb, 2011. "What Explains State Variation in SSDI Application Rates?," Working Papers, Center for Retirement Research at Boston College wp2011-23, Center for Retirement Research, revised Nov 2011.
    13. David H. Autor & Mark G. Duggan, 2006. "The Growth in the Social Security Disability Rolls: A Fiscal Crisis Unfolding," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 71-96, Summer.
    14. Johannes F. Schmieder & Till von Wachter & Stefan Bender, 2012. "The Effects of Extended Unemployment Insurance Over the Business Cycle: Evidence from Regression Discontinuity Estimates Over 20 Years," The Quarterly Journal of Economics, Oxford University Press, vol. 127(2), pages 701-752.
    15. 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.
    16. Shigeru Fujita, 2010. "Economic effects of the unemployment insurance benefit," Business Review, Federal Reserve Bank of Philadelphia, issue Q4, pages 20-27.
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    Cited by:

    1. Jesse Rothstein & Robert G. Valletta, 2017. "Scraping by: Income and Program Participation After the Loss of Extended Unemployment Benefits," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 36(4), pages 880-908, September.
    2. David Wiczer & Amanda Michaud, 2017. "The Disability Option: Labor Market Dynamics with Macroeconomic and Health Risks," 2017 Meeting Papers 1459, Society for Economic Dynamics.
    3. repec:eee:pubeco:v:166:y:2018:i:c:p:27-38 is not listed on IDEAS
    4. East, Chloe N. & Kuka, Elira, 2015. "Reexamining the consumption smoothing benefits of Unemployment Insurance," Journal of Public Economics, Elsevier, vol. 132(C), pages 32-50.
    5. Robert E. Hall, 2014. "Quantifying the Lasting Harm to the U.S. Economy from the Financial Crisis," NBER Chapters,in: NBER Macroeconomics Annual 2014, Volume 29, pages 71-128 National Bureau of Economic Research, Inc.
    6. Bagaria, Nitika & Petrongolo, Barbara & Van Reenen, John, 2015. "Can Helping the Sick Hurt the Able? Incentives, Information and Disruption in a Disability-Related Welfare Reform," IZA Discussion Papers 9089, Institute of Labor Economics (IZA).
    7. Ziebarth, Nicolas R., 2017. "Social Insurance and Health," IZA Discussion Papers 10918, Institute of Labor Economics (IZA).
    8. Johannes F. Schmieder & Till von Wachter & Stefan Bender, 2016. "The Effect of Unemployment Benefits and Nonemployment Durations on Wages," American Economic Review, American Economic Association, vol. 106(3), pages 739-777, March.
    9. Stephanie Aaronson & Tomaz Cajner & Bruce Fallick & Felix Galbis-Reig & Christopher Smith & William Wascher, 2014. "Labor Force Participation: Recent Developments and Future Prospects," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(2 (Fall)), pages 197-275.
    10. Marco Di Maggio & Amir Kermani, 2016. "The Importance of Unemployment Insurance as an Automatic Stabilizer," NBER Working Papers 22625, National Bureau of Economic Research, Inc.
    11. Josef Zweimüller, 2018. "Unemployment insurance and the labor market," ECON - Working Papers 276, Department of Economics - University of Zurich.
    12. De Brouwer, Octave & Leduc, Elisabeth & Tojerow, Ilan, 2019. "The Unexpected Consequences of Job Search Monitoring: Disability Instead of Employment?," IZA Discussion Papers 12304, Institute of Labor Economics (IZA).
    13. Jeffrey B. Liebman, 2015. "Understanding the Increase in Disability Insurance Benefit Receipt in the United States," Journal of Economic Perspectives, American Economic Association, vol. 29(2), pages 123-150, Spring.
    14. Olivier Coibion & Yuriy Gorodnichenko & Dmitri Koustas, 2013. "Amerisclerosis? The Puzzle of Rising U.S. Unemployment Persistence," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 44(2 (Fall)), pages 193-260.
    15. Dave Reifschneider & William Wascher & David Wilcox, 2015. "Aggregate Supply in the United States: Recent Developments and Implications for the Conduct of Monetary Policy," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 63(1), pages 71-109, May.
    16. Marianne Bitler & Hilary Hoynes, 2016. "The More Things Change, the More They Stay the Same? The Safety Net and Poverty in the Great Recession," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 403-444.
    17. George J. Borjas & David J.G. Slusky, 2018. "Health, Employment, and Disability: Implications from the Undocumented Population," NBER Working Papers 24504, National Bureau of Economic Research, Inc.
    18. David Neumark & Maysen Yen, 2018. "Relative Sizes of Age Cohorts and Labor Force Participation of Older Workers," Working Papers wp390, University of Michigan, Michigan Retirement Research Center.
    19. Nitika Bagaria & Felix Koenig & Barbara Petrongolo & John Van Reenen, 2015. "Can Helping the Sick Hurt the Able? Incentives, Information and Disruption in a Welfare Reform," CEP Discussion Papers dp1347, Centre for Economic Performance, LSE.
    20. Danny Yagan, 2017. "Employment Hysteresis from the Great Recession," NBER Working Papers 23844, National Bureau of Economic Research, Inc.
    21. Ajit Zacharias & Thomas Masterson & Fernando Rios-Avila, 2018. "Stagnating Economic Well-Being and Unrelenting Inequality: Post-2000 Trends in the United States," Economics Public Policy Brief Archive ppb_146, Levy Economics Institute.
    22. Lucie Schmidt, 2013. "The New Safety Net? Supplemental Security Income after Welfare Reform," Department of Economics Working Papers 2013-07, Department of Economics, Williams College.

    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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