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Disability, Earnings, Income and Consumption

In: Social Insurance Programs (Trans-Atlantic Public Economic Seminar - TAPES)

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  • Bruce Meyer
  • Wallace K. C. Mok

Abstract

We determine the prevalence of disability and examine how a wide range of outcomes change with disability. The outcomes we examine include employment, hours, earnings, income and consumption. We have five main findings. First, disability rates are high. We find that nearly one-fifth of male household heads 22-64 in the PSID are currently disabled. Approximately, 30 percent of our sample has a disabling condition at some time during 1968- 2003. Of these disabled, over 51 percent have a condition that lasts more than 3 years. 30 percent are severely disabled and 20 percent are both chronically and severely disabled. In terms of life-time prevalence, we find that a person reaching age 60 has a 54 percent chance of having been disabled at least once during his working years and a nearly 40 percent chance of experiencing a chronic disability. Second, disability is associated with much worse outcomes. Ten years after disability onset, those with chronic and severe disability condition have seen their earnings decline by 61%, income by 46%, food plus housing consumption by 25%, and food consumption by 15%. In addition, 66 percent of these most disabled individuals do not work ten years after onset. Third, these outcome measures differ sharply across disability groups. The previously mentioned declines for the most disabled are over twice as large as those for the average disabled. Fourth, our findings indicate the partial but incomplete role individual savings, family support and social insurance play in reducing the consumption drop following disability. Despite the various government programs available, about one-fifth of the disabled have incomes below the poverty line in the long term. Fifth, we find a noticeable fall in employment and earnings prior to the onset of reported disability.
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Suggested Citation

  • Bruce Meyer & Wallace K. C. Mok, 2016. "Disability, Earnings, Income and Consumption," NBER Chapters,in: Social Insurance Programs (Trans-Atlantic Public Economic Seminar - TAPES) National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:13813
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    Cited by:

    1. Hamish Low & Luigi Pistaferri, 2010. "Disability Risk, Disability Insurance and Life Cycle Behavior," NBER Working Papers 15962, National Bureau of Economic Research, Inc.
    2. Stancanelli, Elena G. F., 2014. "Divorcing Upon Retirement: A Regression Discontinuity Study," IZA Discussion Papers 8117, Institute for the Study of Labor (IZA).
    3. Debra L. Brucker & Sophie Mitra & Navena Chaitoo & Joseph Mauro, 2014. "More likely to be poor whatever the measure: persons with disabilities in the U.S," Fordham Economics Discussion Paper Series dp2014-01, Fordham University, Department of Economics.
    4. Jones, Melanie K. & Mavromaras, Kostas G. & Sloane, Peter J. & Wei, Zhang, 2015. "The Dynamic Effect of Disability on Work and Subjective Wellbeing in Australia," IZA Discussion Papers 9609, Institute for the Study of Labor (IZA).
    5. Priyanka Anand & Yonatan Ben-Shalom, 2014. "How Do Working-Age People With Disabilities Spend Their Time? New Evidence From the American Time Use Survey," Demography, Springer;Population Association of America (PAA), vol. 51(6), pages 1977-1998, December.
    6. Andreas Ravndal Kostøl & Magne Mogstad, 2015. "Earnings, Disposable Income, and Consumption of Allowed and Rejected Disability Insurance Applicants," American Economic Review, American Economic Association, vol. 105(5), pages 137-141, May.
    7. Moore, Timothy J., 2015. "The employment effects of terminating disability benefits," Journal of Public Economics, Elsevier, vol. 124(C), pages 30-43.
    8. Demianova, Anna & Lukiyanova, Anna, 2016. "The impact of disability status on labor supply in Russia," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 44, pages 50-74.
    9. Wallace K. C. Mok & Bruce D. Meyer & Kerwin Kofi Charles & Alexandra C. Achen, 2008. "A Note on "The Longitudinal Structure of Earnings Losses among Work-Limited Disabled Workers"," Journal of Human Resources, University of Wisconsin Press, vol. 43(3), pages 721-728.
    10. David Autor & Andreas Ravndal Kostøl & Magne Mogstad & Bradley Setzler, 2017. "Disability benefits, consumption insurance, and household labor supply," Working Paper 2017/16, Norges Bank.
    11. David Autor & Mark Duggan & Jonathan Gruber, 2014. "Moral Hazard and Claims Deterrence in Private Disability Insurance," American Economic Journal: Applied Economics, American Economic Association, vol. 6(4), pages 110-141, October.
    12. Albert Park & Shu Cai, 2015. "Permanent Income and Subjective Well-Being," HKUST IEMS Working Paper Series 2015-08, HKUST Institute for Emerging Market Studies, revised Feb 2015.
    13. Alexander Gelber & Timothy J. Moore & Alexander Strand, 2017. "The Effect of Disability Insurance Payments on Beneficiaries' Earnings," American Economic Journal: Economic Policy, American Economic Association, vol. 9(3), pages 229-261, August.
    14. repec:eee:jhecon:v:53:y:2017:i:c:p:38-52 is not listed on IDEAS
    15. Goodstein, Ryan M. & Rhine, Sherrie L.W., 2017. "The effects of bank and nonbank provider locations on household use of financial transaction services," Journal of Banking & Finance, Elsevier, vol. 78(C), pages 91-107.
    16. Perry Singleton, 2012. "Insult to Injury: Disability, Earnings, and Divorce," Journal of Human Resources, University of Wisconsin Press, vol. 47(4), pages 972-990.
    17. Jones, Melanie K. & McVicar, Duncan, 2017. "The Dynamics of Disability and Benefit Receipt in Britain," IZA Discussion Papers 11186, Institute for the Study of Labor (IZA).

    More about this item

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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