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Rejection from the Disability Insurance Program and Dependency on Social Support

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  • Susan E. Chen

    (University of Alabama)

Abstract

Recent studies find that many workers do not return to the labor force after their applications for Disability Insurance (DI) are denied. It is, therefore, important to understand how this group funds their consumption. This paper uses the Survey of Income and Program Participation linked to administrative data to examine the social support participation behavior of rejected applicants. By following cohorts of individuals from 10 years before to 10 years after filing for DI, this paper shows that rejected DI applicants are at most 10 percent more likely to depend on social support programs than healthy workers. More general models show that at the time of application rejected applicants are 25 percent more likely to depend on social support programs than healthy workers. These effects decrease across time, but up to 10 years after filing, rejected DI applicants are still up to 12 percent more likely to depend on social support programs. These are the same levels of social support participation exhibited by DI beneficiaries. While rejecting more DI applicants may reduce DI outlays, these results suggest that rejected applicants are more likely to depend on other federally funded assistance programs to fund their (very) early retirement.

Suggested Citation

  • Susan E. Chen, 2014. "Rejection from the Disability Insurance Program and Dependency on Social Support," Working Papers wp305, University of Michigan, Michigan Retirement Research Center.
    • Handle: RePEc:mrr:papers:wp305
    as

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    References listed on IDEAS

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    1. Bound, John, 1989. "The Health and Earnings of Rejected Disability Insurance Applicants," American Economic Review, American Economic Association, vol. 79(3), pages 482-503, June.
    2. Seth Giertz & Jeffrey Kubik, 2011. "The Disability Screening Process and the Labor Market Behavior of Accepted and Rejected Applicants: Evidence from the Health and Retirement Study," Journal of Labor Research, Springer, vol. 32(3), pages 237-253, September.
    3. Staubli, Stefan, 2011. "The impact of stricter criteria for disability insurance on labor force participation," Journal of Public Economics, Elsevier, vol. 95(9-10), pages 1223-1235, October.
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    5. 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.
    6. 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.
    7. Richard Burkhauser & Mary C. Daly, 2011. "The Declining Work and Welfare of People with Disabilities," Books, American Enterprise Institute, number 7631, September.
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