Cover: Exploring the Influences of External Factors on the Veteran Disability Compensation Program

Exploring the Influences of External Factors on the Veteran Disability Compensation Program

Published Feb 23, 2021

by Nicholas Broten

Download eBook for Free

FormatFile SizeNotes
PDF file 4.7 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

The veteran disability compensation program (VADC) has grown considerably in the last two decades, both in terms of the total number of veterans receiving compensation and the average amount of compensation per recipient. Previous research has identified changes in the composition of the veteran population and in the processes and regulations governing benefit receipt as major proximate causes of this growth. These explanations tend to underemphasize the ways in which conditions outside of the system can affect its performance and scope. In this dissertation, I explore three of these external factors.

In the first chapter, I present descriptive evidence on the relationship between conditions in local labor markets and trends in VADC expenditures and participation. These estimates show a modest positive association between labor market conditions and expenditures in regular times, which strengthens in the aftermath of the Great Recession of 2007–2009. Labor market conditions are also positively associated with local changes in the number of veterans with disability ratings of 50 percent or more.

In the second chapter, I examine whether the incomplete implementation of the Patient Protection and Affordable Care Act (ACA), which encouraged adoption of health insurance by uninsured people, affected participation in the VADC program. Using several quasi-experimental methods, I find that veterans residing in states that did not expand their Medicaid program as part of the ACA were 0.5 – 1.5 percentage points more likely to claim a disability rating of 50 percent or more than those residing in states that expanded Medicaid. The results indicate that Medicaid eligibility and take-up of VA health care were key mechanisms driving this effect.

Finally, in the third chapter I explore whether the 2011 expansion of the Work Opportunity Tax Credit (WOTC) increased employment rates for veterans experiencing unemployment and veterans with service-connected disabilities, two groups targeted by the credit. I find no evidence that the tax credit increased employment rates for service-disabled veterans or veterans with six or more months out of work. For veterans living in families receiving benefits from the Supplemental Nutrition Assistance Program (SNAP), the WOTC increased the employment rate by approximately 2.5 percentage points.

Research conducted by

This document was submitted as a dissertation in September 2020 in partial fulfillment of the requirements of the doctoral degree in public policy analysis at the Pardee RAND Graduate School. The faculty committee that supervised and approved the dissertation consisted of Jim Hosek (Chair), Philip Armour, Charles Goldman, and Mark Duggan (outside reader).

This publication is part of the RAND dissertation series. Pardee RAND dissertations are produced by graduate fellows of the Pardee RAND Graduate School, the world's leading producer of Ph.D.'s in policy analysis. The dissertations are supervised, reviewed, and approved by a Pardee RAND faculty committee overseeing each dissertation.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.