The U.S. Social Security Disability Insurance (SSDI) program provides income replacement to individuals who are largely unable to work because of a long-lasting health condition. Applicants must demonstrate that they did not perform substantial gainful activity (SGA) for at least five months after disability onset; once enrolled in the program, the first dollar earned above the SGA threshold results in suspension of benefits, following a Trial Work Period. Recent legislative reforms have been oriented around the idea that many SSDI recipients could potentially work if offered targeted employment support services. Under the Ticket to Work Incentive and Work Incentives Improvement Act, Congress directed the Social Security Administration to study the effects of a "benefit offset" policy, under which the SSDI benefit would be reduced by $1 for every $2 of earnings above the SGA threshold. Such a policy could affect program entry, as it might induce some individuals to apply for SSDI benefits who choose not to under the current policy. This report describes two research design options for estimating such induced entry effects: one that uses stated preferences and one that uses past policy changes in a simple structural framework. The authors detail both design options and compare them according to five criteria: internal validity, external validity, flexibility, cost, and speed.
Table of Contents
A Theoretical Framework for Induced Entry
Recommendations and Conclusions