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Why Does Disability Increase During Recessions? Evidence from Medicare

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Listed:
  • Colleen Carey
  • Nolan H. Miller
  • David Molitor

Abstract

Social Security Disability Insurance (DI) awards rise in recessions, especially for older adults. Using Medicare data, we investigate whether this pattern is driven by changes in health or the cost of entering DI. Higher unemployment at application corresponds to increased DI entry, lower medical spending, and lower mortality among new entrants. Leveraging age-based discontinuities in disability eligibility criteria at older ages, we find that workers induced into DI by poor economic conditions have similar spending and mortality outcomes to those induced by relaxed eligibility criteria, suggesting that changes in entry costs can fully account for cyclical DI entry.

Suggested Citation

  • Colleen Carey & Nolan H. Miller & David Molitor, 2022. "Why Does Disability Increase During Recessions? Evidence from Medicare," NBER Working Papers 29988, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29988
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    Cited by:

    1. Goda, Gopi Shah & Jackson, Emilie & Nicholas, Lauren Hersch & Stith, Sarah See, 2023. "Older workers’ employment and Social Security spillovers through the second year of the COVID-19 pandemic," Journal of Pension Economics and Finance, Cambridge University Press, vol. 22(4), pages 524-549, October.

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    More about this item

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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