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The Disability Option: Labor Market Dynamics with Macroeconomic and Health Risks

Author

Listed:
  • David Wiczer

    (FRB St. Louis)

  • Amanda Michaud

    (Indiana University)

Abstract

In recent decades, Social Security Disability Insurance (SSDI) claims have risen rapidly. We evaluate the importance of changing macroeconomic conditions in shaping this trend. Our quantitative framework considers that economic conditions interact with individuals' health status in their decisions to apply for SSDI. Crucially, these factors are correlated through the nature of work: multiple sectors differentially expose workers to health and economic risks. Decomposing factors driving SSDI growth in a calibrated model, we find the deteriorating economic conditions and concentration of health risks account for about half of the increase in SSDI claims predicted by the model, about a third overall.

Suggested Citation

  • David Wiczer & Amanda Michaud, 2017. "The Disability Option: Labor Market Dynamics with Macroeconomic and Health Risks," 2017 Meeting Papers 1459, Society for Economic Dynamics.
  • Handle: RePEc:red:sed017:1459
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    References listed on IDEAS

    as
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    1. The Disability Option: Labor Market Dynamics with Macroeconomic and Health Risks
      by Christian Zimmermann in NEP-DGE blog on 2019-01-31 02:42:18

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    Cited by:

    1. Borella, Margherita & De Nardi, Mariacristina & Yang, Fang, 2019. "The lost ones: the opportunities and outcomes of non-college educated Americans born in the 1960s," CEPR Discussion Papers 13582, C.E.P.R. Discussion Papers.
    2. Michaud, Amanda & Nelson, Jaeger & Wiczer, David, 2018. "Vocational considerations and trends in Social Security Disability," The Journal of the Economics of Ageing, Elsevier, vol. 11(C), pages 41-51.
    3. Margherita Borella & Mariacristina De Nardi & Fang Yang, 2020. "The Lost Ones: The Opportunities and Outcomes of White, Non-College-Educated Americans Born in the 1960s," NBER Macroeconomics Annual, University of Chicago Press, vol. 34(1), pages 67-115.
    4. Margherita Borella & Fang Yang & Mariacristina De Nardi, 2019. "The changing opportunities and outcomes of non-college educated Americans," 2019 Meeting Papers 206, Society for Economic Dynamics.

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