Do Stronger Employment Discrimination Protections Decrease Reliance on Social Security Disability Insurance? Evidence from the U.S. Social Security Reforms

This paper examines spillovers onto Social Security Disability Insurance (SSDI) that occurred due to the Social Security Amendments of 1983, which, among other changes, gradually increased the retirement age for full benefits from 65 to 67. We determine whether the spillovers onto SSDI were different in states with age and disability discrimination laws that were broader (covered more people) or stronger (allowed for more damages for plaintiffs) than the federal Age Discrimination in Employment Act and the Americans with Disabilities Act.

Our paper uses three sources of data: (1) counts of the universe of SSDI applications and receipts by state, age group, sex, and year; (2) the Health and Retirement Study, merged with restricted-access state identifiers; and, (3) the Health and Retirement Study, merged with restricted access state identifiers and Social Security Administration Form-831 disability records.

To quantify the moderating impact of existing state laws on spillovers onto SSDI applications, receipts and employment, we use a difference-in-differences approach, comparing age cohorts who were affected by the reforms to similar age cohorts who were unaffected, and then this comparing this affected-unaffected difference across states by state law. Using the Health and Retirement Study data, we also conduct heterogeneity analysis to determine if effects differed for different age groups (ages 55-61, ages 62-64, ages 65 to the full benefits retirement age), those with or without disabilities, and by sex