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Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt

  • Nicole Maestas

    (RAND Corporation)

  • Kathleen Mullen

    (RAND Corporation)

  • Alexander Strand

    (SSA)

We present the first causal estimates of the effect of Social Security Disability Insurance benefit receipt on labor supply using all program applicants. We use new administrative data to match applications to disability examiners, and exploit variation in examiners’ allowance rates as an instrument for benefit receipt. We find that among the estimated 23% of applicants on the margin of program entry, employment would have been 28 percentage points higher had they not received benefits. The effect is heterogeneous, ranging from no effect for those with more severe impairments to 50 percentage points for entrants with relatively less severe impairments.

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File URL: http://www.mrrc.isr.umich.edu/publications/Papers/pdf/wp241.pdf
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Paper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number wp241.

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Length: 47 pages
Date of creation: Aug 2012
Date of revision:
Handle: RePEc:mrr:papers:wp241
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  1. Eric French & Jae Song, 2009. "The effect of disability insurance receipt on labor supply," Working Paper Series WP-09-05, Federal Reserve Bank of Chicago.
  2. James J. Heckman & Sergio Urzua & Edward Vytlacil, 2009. "Understanding Instrumental Variables in Models with Essential Heterogeneity," Working Papers 200941, Geary Institute, University College Dublin.
  3. Chen, Susan & van der Klaauw, Wilbert, 2008. "The work disincentive effects of the disability insurance program in the 1990s," Journal of Econometrics, Elsevier, vol. 142(2), pages 757-784, February.
  4. 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 3308-29, December.
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