The Effect of the Disability Insurance Application Decision on the Employment of Denied Applicants

TitleThe Effect of the Disability Insurance Application Decision on the Employment of Denied Applicants
Publication TypeJournal Article
Year of Publication2018
AuthorsKhan, MR
JournalAEA Papers and Proceedings
Volume108
Pagination267-71
Date PublishedMay
KeywordsDisability, disability insurance
Abstract

Social Security Disability Insurance (SSDI) affects the labor supply of applicants through its work discouragement and through human capital deterioration regardless of the ultimate acceptance or denial of the claim. In this paper, I provide an estimate of the causal effect of SSDI application on denied applicants using non-applicants as a comparison group. Exploiting instrumental variable approach, I find that the SSDI causes a 36 percentage point reduction in employment of the denied applicants of ages 50 to 58 in the short run. The loss of potential employment of the denied SSDI applicants is a welfare loss to the society.

URLhttps://www.aeaweb.org/articles?id=10.1257/pandp.20181046
DOI10.1257/pandp.20181046
Citation Key10.1257/pandp.20181046