Does Disability Insurance Receipt Discourage Work?

Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt

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The authors present the first estimates of the causal effects of Social Security Disability Insurance receipt on labor supply estimated using the entire population of program applicants. They exploit administrative data to match applications to disability examiners, and use natural variation in examiners' allowance rates as an instrument for the allowance decision in a labor supply equation contrasting denied vs. allowed applicants. Importantly, they find that the disincentive effect is heterogeneous, ranging from a 10 percentage point reduction in labor force participation for those with more severe impairments to a 60 percentage point reduction for entrants with relatively less severe impairments.

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Document Details

  • Copyright: RAND Corporation
  • Availability: Web-Only
  • Pages: 44
  • Document Number: WR-853-2
  • Year: 2011
  • Series: Working Papers

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