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American Economic Review: Vol. 103 No. 5 (August 2013)

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Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt

Article Citation

Maestas, Nicole, Kathleen J. Mullen, and Alexander Strand. 2013. "Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt." American Economic Review, 103(5): 1797-1829.

DOI: 10.1257/aer.103.5.1797

Abstract

We present the first causal estimates of the effect of Social Security Disability Insurance benefit receipt on labor supply using all program applicants. We use administrative data to match applications to disability examiners and exploit variation in examiners' allowance rates as an instrument for benefit receipt. We find that among the estimated 23 percent of applicants on the margin of program entry, employment would have been 28 percentage points higher had they not received benefits. The effect is heterogeneous, ranging from no effect for those with more severe impairments to 50 percentage points for entrants with relatively less severe impairments.

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Authors

Maestas, Nicole (RAND Corporation, Santa Monica, CA)
Mullen, Kathleen J. (RAND Corporation, Santa Monica, CA)
Strand, Alexander (US Social Security Administration)

JEL Classifications

H55: Social Security and Public Pensions
J14: Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination
J22: Time Allocation and Labor Supply


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