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Dynamic Modeling of the SSDI Application Timing Decision: The Importance of Policy Variables

Author

Listed:
  • Burkhauser, Richard V.

    () (Cornell University)

  • Butler, J. S.

    () (University of Kentucky)

  • Gumus, Gulcin

    () (Florida Atlantic University)

Abstract

This paper analyzes the importance of policy variables in the context of Social Security Disability Insurance (SSDI) application timing decision. Previously, we explicitly modeled the optimal timing of SSDI application using dynamic structural models. We estimated these models using data from the Health and Retirement Study (HRS). This paper uses option value model estimates to simulate application timing under alternative SSDI policy formulations. We consider changes in three policy variables: benefit levels, acceptance rates, and employer accommodation. Our simulations suggest all these changes would have substantial effects on expected spell lengths until application and on lifetime application rates, and hence on SSDI caseloads.

Suggested Citation

  • Burkhauser, Richard V. & Butler, J. S. & Gumus, Gulcin, 2003. "Dynamic Modeling of the SSDI Application Timing Decision: The Importance of Policy Variables," IZA Discussion Papers 942, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp942
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    References listed on IDEAS

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    More about this item

    Keywords

    Health and Retirement Survey; Social Security Disability Insurance; option value;
    All these keywords.

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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