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The Social Security Disability Program and Labor Force Participation

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  • Jonathan S. Leonard

Abstract

In the last twenty years the labor force participation rates of 45 to 54-year-old men have fallen 10.6 percentage points among non-whites and 4.4 percentage points among whites. I find that nearly half of this puzzling decline can be explained by the growth of the Social Security Disability program. By 1975, 6.22% of the prime-age non-white men and 3.57% of the white men were Social Security Disability beneficiaries. Despite the medical screening of applicants, I find in cross-section estimates an elasticity of .35 for beneficiary status with respect to benefit levels. As eligibility requirements have eased and as benefit levels have increased relative to earnings more men have dropped out of the labor force and become Social Security Disability beneficiaries.

Suggested Citation

  • Jonathan S. Leonard, 1979. "The Social Security Disability Program and Labor Force Participation," NBER Working Papers 0392, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:0392
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    Cited by:

    1. Jonathan S. Leonard, 1985. "Labor Supply Incentives and Disincentives for the Disabled," NBER Working Papers 1744, National Bureau of Economic Research, Inc.
    2. Burkhauser, Richard V. & Butler, J. S. & Kim, Yang Woo, 1995. "The importance of employer accommodation on the job duration of workers with disabilities: A hazard model approach," Labour Economics, Elsevier, vol. 2(2), pages 109-130, June.
    3. Robert S. Gay & William L. Wascher, 1989. "Persistence Effects in Labor Force Participation," Eastern Economic Journal, Eastern Economic Association, vol. 15(3), pages 177-187, Jul-Sep.
    4. Daniel S. Hamermesh, 1980. "Transfers, Taxes, and the NAIRU," NBER Working Papers 0548, National Bureau of Economic Research, Inc.
    5. Lixin Cai & Ha Vu & Roger Wilkins, 2007. "Disability Support Pension Recipients: Who Gets Off (and Stays Off) Payments?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 40(1), pages 37-61, March.
    6. Philip de Jong & Robert Haveman & Barbara Wolfe, 1988. "Labor and Transfer Income and Older Women's Work: Estimates From the United States," NBER Working Papers 2728, National Bureau of Economic Research, Inc.
    7. Perry Singleton, 2009. "The Effective Target of the Social Security Disability Benefits Reform Act of 1984," Center for Policy Research Working Papers 119, Center for Policy Research, Maxwell School, Syracuse University.
    8. Richard B. Freeman & John T. Dunlop & R. F. Schubert, 1980. "The Evolution of the American Labor Market, 1948-80," NBER Chapters,in: The American Economy in Transition, pages 349-414 National Bureau of Economic Research, Inc.
    9. 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.
    10. Gustman, Alan L & Steinmeier, Thomas L, 1986. "A Disaggregated, Structural Analysis of Retirement by Race, Difficulty of Work and Health," The Review of Economics and Statistics, MIT Press, vol. 68(3), pages 509-513, August.
    11. Sergi Jiménez-Martín & José M. Labeaga & Cristina Vilaplana Prieto, 2006. "Award errors and permanent disability benefits in Spain," Economics Working Papers 966, Department of Economics and Business, Universitat Pompeu Fabra.
    12. Richard V. Burkhauser & J. S. Butler & Yang-Woo Kim, 1996. "The timing of disability insurance application: a choice-based semiparametric hazard model," Working Papers 1996-005, Federal Reserve Bank of St. Louis.
    13. Merkuryeva Irina, 2007. "The system of disability benefits in Russia. Estimation of targeting accuracy," EERC Working Paper Series 07-04e, EERC Research Network, Russia and CIS.
    14. Richard B. Freeman, 1980. "The Evolution of the American Labor Market 1948-1980," NBER Working Papers 0446, National Bureau of Economic Research, Inc.
    15. Gruber, Jonathan & Kubik, Jeffrey D., 1997. "Disability insurance rejection rates and the labor supply of older workers," Journal of Public Economics, Elsevier, vol. 64(1), pages 1-23, April.
    16. H. Hoynes & R. Moffitt, "undated". "The effectiveness of financial work incentives in DI and SSI: Lessons from other transfer programs," Institute for Research on Poverty Discussion Papers 1073-95, University of Wisconsin Institute for Research on Poverty.
    17. repec:eee:labchp:v:3:y:1999:i:pc:p:3417-3528 is not listed on IDEAS
    18. Jonathan Gruber & Jeffrey D. Kubik, 1994. "Disability Insurance Rejection Rates and the Labor Supply of Older Workers," NBER Working Papers 4941, National Bureau of Economic Research, Inc.
    19. Krueger, Alan B. & Meyer, Bruce D., 2002. "Labor supply effects of social insurance," Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 33, pages 2327-2392 Elsevier.
    20. 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 for the Study of Labor (IZA).

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