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How Does the Composition of Disability Insurance Applicants Change Across Business Cycles?


  • Norma B. Coe
  • Matthew S. Rutledge


Much as in previous recessions, the number of applications to public disability insurance programs increased sharply during the Great Recession. We find that the composition of applicants also changes across business cycles. For example, applicants during economic downturns, and especially during the Great Recession, are younger, better educated, higher income, and more likely to have recent work experience. However, we find only mixed evidence supporting the theory that the increase in applications in downturns is caused by healthier applicants who apply to disability programs only because they are unemployed. We formally decompose how the differences among the applicants across the business cycle – both from peak to trough and from trough to trough – contribute to the increased probability of applying for, and being awarded, benefits. We find that changing demographics and unemployment rates explain less than half of the increase in the application rate and only one quarter of the increase in the awards to applicants (the allowance rate) between the 2004-2006 expansion and the Great Recession. Further, these same factors predict a fall in the award rate (among eligible individuals), in contrast to the increase observed in the data. Together with the fact that there have been no programmatic changes in the disability programs in the 2000s, these results suggest there have been fundamental changes over the last decade in the way that people apply to disability and in the way these applications are evaluated that cannot be explained by observable differences.

Suggested Citation

  • Norma B. Coe & Matthew S. Rutledge, 2013. "How Does the Composition of Disability Insurance Applicants Change Across Business Cycles?," Working Papers, Center for Retirement Research at Boston College wp2013-5, Center for Retirement Research.
  • Handle: RePEc:crr:crrwps:wp2013-5

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    References listed on IDEAS

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    Cited by:

    1. Sergi Jiménez-Martín & Arnau Juanmarti Mestres & Judit Vall Castelló, 2016. "Great Recession and disability insurance in Spain," Economics Working Papers 1519, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2017.
    2. Sergi Jiménez-Martín & Arnau Juanmarti Mestres & Judit Vall-Castello, 2016. "Great Recession and Disability in Spain," Working Papers 896, Barcelona Graduate School of Economics.

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